Guidelines for Handling the Reporting of Business Expenses and Reimbursements
![handle is hein.journals/taxtm38 and id is 994 raw text is: present federal tax depreciation policy pro-
duce a more or less equitable definition of
the income of owners of depreciable prop-
erty, as compared, say, with the income of
business executives or wage earners? If
tax depreciation can, in fact, produce meas-
urable and predictable effects on industrial
growth and stability, is depreciation a better
method of accomplishing the desired ob-
jectives than, say, straight rate reductions
in the federal income tax? To what extent
does increased cash availability resulting
from increased depreciation allowances en-
courage increased capital investment? (For
example, what part did the 1954 liberaliza-
tion of the deduction play in the observed
expansion of capital investment in the late
fifties?),
(2) Another problem cuts across these
complexities. Drepreciation is consistently
one of the largest single federal income
tax deductions (for corporations, currently
about one third of their entire net taxable
income). Thus, however various deprecia-
tion changes may redefine taxable income,
the Treasury has had to cope with the
initial problem that relatively slight shifts
in the concept or rate of this deduction
carry with them wide variations in tax
revenues. This preoccupation of the Treas-
ury has been constant from the days of
1934, when a Congressional subcommittee
proposed to cut all depreciation allowances
by one fourth (and the corporate tax rate
was 134 per cent), to the days of 1960,
when the corporate rate is almost four
times as high but when everyone (the
Treasury included), subscribes to the gen-
eral principle that the depreciation deduc-
tion should be liberalized.
(3) After the Evans, Massey and Hertz
cases, the main future arena of depreciation
controversy between business and the Trea-
ury seems most likely to be Congress and
not the courts. At this writing, the author's
information is that there will probably be
no depreciation proposal developed for seri-
ous consideration in the new Congress until
after .about six months have passed. Which-
ever Presidential nominee is elected, the
incoming administration will be a new one,
with a new spending program to be budgeted;
moreover, the results of the Treasury's cur-
rent depreciation questionnaire will have to
be accumulated, sifted and translated into
a proposal. Since the available evidence
indicates that the effectiveness of any de-
preciation increase as an incentive to in-
vestment depends in large measure on the
extent to which it grants a near-term tax
cut, Congressional sympathy for such an
increase will be greatly, and perhaps deci-
sively, influenced by the apparent degree
of urgency in our defense requirements.
[The End]
Guidelines for Handling the Reporting
of Business Expenses and Reimbursements
By B. KENNETH SANDEN
' The author is a partner, Price,
Waterhouse and Company, Detroit.
F E\W of the recent developments in the
field of federal income taxation have
aroused as much interest (and possibly
resentment) as the Treasury's program for
the reporting and examination of expense
accounts. This program stems from various
pressures generated through alleged abuses
of the tax laws covering the deduction as
business expenditures of amounts spent for
travel and entertainment. Aside from the
Treasury Department itself, complaints have
been received from numerous taxpayers and
members of the Congress of the United
States. In fact, certain revelations which
first came to light during Congressional
committee investigations (remember the 5
per centers) only served to create a scare
or hysteria type of atmosphere. Subse-
quently the so-called expense account abuses
became fashionable subjects for cartoonists,
columnists and feature writers. Through
such mediums the man in the street has
December, 1960 0 TA X E S - The Tax Magazine](ViewImageLocal?handle=hein.journals/taxtm38&div=153&collection=&method=preview&ext=.png&size=3)
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Guidelines for Handling the Reporting of Business Expenses and Reimbursements
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