Februauy 23, 1922 



The Florists^ Review 



21 



How a Field of Celosia Chrysantbeflora Looked During the Height of Bloom Last August. 



per cent of the value of the greenhouses 

 has been charged off, no depreciation 

 will be allowed on the greenhouses. 

 This may seem like looking a long dis- 

 tance ahead to some florists, but those 

 who have charged as much as eight, ten 

 and twelve per cent depreciation on 

 their greenhouses will see from this 

 what will be their predicament a few 

 years hence. 



So much depends on the care given 

 greenhouses by their owners, on the 

 effect of a particular climate on them, 

 on the method of constructiou, and on 

 the kind and quality of materials, that 

 no definite percentage for depreciation 

 can be given for general use. There are 

 some greenhouses in use today that were 

 built between thirty and forty years 

 ago. Some houses have been torn down 

 after a lifetime one-third as long be- 

 cause it was deemed advisable to re- 

 place them with more modern struc- 

 tures. Each florist, considering his own 

 case, must work out what he believes 

 to be "a reasonable allowance." 



It should be noted that the regula- 

 tions state that the aggregate of the 

 sums deducted for depreciation at the 

 end of the life of the greenhouse should 

 be its cost "or its value as of March 1, 

 1913." Thus, if houses were 10 years 

 old when the income tax was first levied 

 and the life of the houses was expected 

 to be twenty years, one-tenth of the 

 value fixed as "that of March 1. ISl."?, 

 would be deducted in each of the suc- 

 ceeding ten years. 



Applies to Other Assets. 



Depreciation applies to all other busi- 

 ness assets of florists as well as to 

 greenhouse structures. It applies to au- 

 tomobile trucks, to heating systems, to 

 sheds, to office and store equipment, to 

 iceboxes, etc. Queer though it is, the 

 l>nreau of internal revenue does not al- 

 low a taxpayer to calculate depreciation 

 on these items as a business man would 

 in his own account. On an automobile 

 truck purchased for $4,000, the life of 

 which is estimated to be four vears, 

 depreciation of $1,000 per annum would 

 be permitted on an income tax return. 

 But any business man knows that such a 

 truck is not worth $3,000 at the end of 

 the first year, nor is it worth $2,000 at 

 the end of the second year — possibly 

 not more than one-half that sum — in 

 the second-hand market. On his own 



books the conservative business man 

 would figure $1,500 to $1,800 deprecia- 

 tion the first year, so as not to overesti- 

 mate his assets. This difference in the 

 method of calculating depreciation for 

 one's own account books and for one's 

 income tax return must be kept in mind. 

 In calculating all items of deprecia- 

 tion, the individual conditions must be 

 taken into account as the deciding fac- 

 tor, and the internal revenue ofiicers 

 will listen to a fair statement in this 

 regard from any taxpayer. It was stated 

 above that a fair rate of depreciation 

 on a brick building was considered to 

 be two and one-half per cent, and yet 

 there are brick buildings in eastern 

 cities of this country which have been 

 standing for over a century. The barn 

 at Mount "Vernon, erected by George 

 Washington's father about the time our 

 first President was born, is still in e^x- 

 cellent condition. Obviously such a 

 building would not be allowed a rate of 

 depreciation of two and one-half per 

 cent per annum. Depreciation on a 

 frame building of four per cent is re- 

 garded as fair, yet not long since a 

 frame building stood in Boston whicli 

 had been erected in the seventeenth cen- 

 tury. Ordinary pipe lias an estimated 

 lifetime of ten to twelve and one-half 

 years, yet in factories where it is sub- 

 jected to acids, its life is but three 

 years. These instances serve to show 

 liow widely percentage figures of depre- 

 ciation differ in tax returns. Each tax- 

 jiayer must calculate his own rate as 

 fairly as he is able. 



Don't Use Inventory. 



It has been stated before in these col 

 unins that growers should not use the 

 inventory method in figuring tax. In 

 this respect greenhouse men are grouped 

 in the agricultural class rather than u\ 

 the mercantile. Quotation of a letter 

 from the acting commissioner of inter- 

 nal revenue to The Review should set 

 at rest any questions regarding inven- 

 tory in growers' minds: 



"The Treasury Department does not 

 require florists to use inventories of 

 growing plants for tlie purpose of cal- 

 culating their not income for income tax 

 purposes. Inventories can be used only 

 in cases where a taxpayer is able to de- 

 termine exactly the amount and value 

 of goods on hand at the beginning and 

 end of the taxable vear. 



"It is held, therefore, that florists 

 should not endeavor to determine the 

 cost of goods sold during the year by 

 attempting to arrive at an inventory 

 value of growing plants on hand at the 

 beginning and end of the taxable year." 



This subject should no longer be one 

 of any doubt in florists' or nurserymen's 

 minds, since The Review of January 8, 

 1921, gave prominence to a letter from 

 an acting deputy commissioner of in- 

 ternal revenue at Washington, which, 

 answered the same question put by at- 

 torneys for the California Association 

 of Nurserymen. The final paragraph of 

 this letter read: 



"It is held, therefore, that where the 

 selling of ornamental plants and trees, 

 as well as fruit trees, is the chief in- 

 come-producing factor of a taxpayer, an 

 inventory of such plants and trees at 

 the beginning and end of the taxable 

 year should not be used in calculating 

 net income for income tax purposes." 



By the same principle losses of grow- 

 ing crops are not deductible, since such 

 crops have not previously added to the 

 owner's capital or income. For in- 

 stance, if a hail storm breaks the glass 

 and destroys the plants in a greenhouse, 

 the cost of the glass is deductible under 

 the heading of "losses of property aris- 

 ing from fires, storms, shipwrecks or 

 other casualties, or from theft, and not 

 compensated for by insurance or other- 

 wise," but the cost of the plants is not 

 deductible. When the florist buys 

 plants, he charges them to operating ex- 

 penses, and if he is compelled to buy 

 them twice in a season his expenses are 

 thereby increased, so that he need not, 

 to estimate his income exactly, charge 

 off as .a loss those which have been de- 

 stroyed. 



CELOSIA CHBYSANTHEFLOEA. 



Offspring of Old-Timers. 



Celosia chrysantheflora, which be- 

 came well known in some of the western 

 flower markets last summer, is a cross 

 between Celosia argentea and Celosia 

 cristata, the old-fashioned cockscomb. 

 In marked contrast, however, to the old- 

 fashioned cockscomb, the flowers are 

 uniform in size and shape. Their gen- 

 eral appearance reminds one of huge 

 chrysanthemums ; hence the name, ' ' chrv- 

 santheflora," chrysanthemum-flowered, 



