The screen writer (Apr-Oct 1948)

Is It Deductible? By MORRIS and GEORGE PRIMOFF With the end of the fiscal year six months away, it has been suggested that screen writers {both employed and unemployed) give some thought at this time to required material for Federal and State Income Tax returns. Now is the time to keep or get that receipt to prove a deduction, to file it away and to know where you've filed it. Special attention is called to the paragraph on Operating Net Loss Deduction which may be helpful to those who had writing income in the last two years but in the current year. To this end, the Screen Writer has asked Morris W . and George Primoff, certified public accountants of New York City and members of the New York Bar Association to make some practical recommendations for writers. This article was written in collaboration with David K. Stern, C.P.A., resident partner in the Los Angeles office of Primoff & Company and auditor of SWG. DOLLARS thrown away thoughlessly through tax ignorance concerning business deductions may mount to sizeable sums over a period of years. Your Uncle Sam places great emphasis upon the fact that each taxpayer should pay his just tax and not a penny more, and does actually encourage taxpayers to learn how to compute their true tax liability. All business deductions are scrutinized in the examination of a return by the Bureau of Internal Revenue and each taxpayer should avoid putting obstacles in the way of the Government's fair decision as to deductibility. Grouping of many items under one category on the return should be avoided. Each item should be clearly denominated so that the Government Examiner will know what expense has been sustained without the necessity for needless correspondence or questioning. Ambiguity on returns has often caused needless field examinations just as inadequate records can result in costly litigation, unnecessary annoyances and wasteful consumption of time once a field examination has been initiated. in Authority for the deduction of writers' expenses is derived from Section 23 (a) (1) (A) of the Internal Revenue Code, which states the following: "In General — All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered ; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; and rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity." Regulations III, Sec. 29.23 (a)-l, which is applicable to the aforestated section of the Code states, among other things, as follows: "Among the items included in business expenses are management expenses, commissions, labor, supplies, incidental repairs, operating expenses of automobiles used in the trade or business, traveling expenses while away from home solely in the pursuit of a trade or business, advertising and other selling expenses, together with insurance premiums against fire, storm, theft, accident, or other similar losses in the case of a business, and rental for the use of business property." Additional light on the subject may be gleaned from Regulations III, Sec. 29.23 (a) -5 which has this to say on the question of professional expenses : "A professional man may claim as deductions the cost of supplies used by him in the practice of his profession, expenses paid in the operation and repair of an automobile used in making professional calls, dues to professional societies and subscriptions to professional journals, the rent paid for office rooms, the cost of the fuel, light, water, telephone, etc., used in such offices, and the hire of office assistants. Amounts currently expended for books, furniture and professional instruments, the useful life of which is short, may be deducted." What, then, in plain parlance, are the business expenses that may be The Screen Writer, May, 1948