170 Wis. 506 | Wis. | 1920
The precise question to be determined is this: May the relators, in making return of their income for the year ending August 31, 1918, anticipate the. amount of income taxes which the' federal government will later on assess against the income earned by them during such' period and deduct'the amount of such anticipated federal income taxes from their income earned during the year ending August 31, 1918? An answer to the question must
“There shall be assessed, levied, collected and paid a tax upon incomes received during the year ending December 31, 1911, and upon incomes received annually thereafter, by such persons and from such sources as hereinafter described; provided, that firms, copartnerships, corporations, joint-stock companies and associations which customarily close their annual accounts on a date other than December 31, or which customarily estimate their income or profits on a basis other than of actual cash receipts and disbursements, may, with the consent and approval of the tax commission, return for assessment and taxation the income or profits earned during the business year for which the accounts of such person are customarily made up.”
Sec. 1087m — 2 specifies what shall be considered income for the purposes of the act. The provisions of that section are not material here. Sec. 1087m — 3 provides what may be deducted from the gross income of corporations. If the deduction claimed by relators can be allowed, it is by virtue of the provisions of sub. (b) or (d) of that section. Sub. (b) provides that there may be deducted—
“Other ordinary and necessary expenses and cash bonuses to employees, actually paid within the year out of the income in the maintenance and operation of its business and property, including a reasonable allowance for depreciation by use, wear and tear of property from which the-income is derived. ...”
Sub. (d), at the time the relators were called upon to make their returns, authorized deductions for—
“Sums paid by such person within the year for taxes imposed by any state of this union or subdivision thereof, or any territory or possession of the United States, upon the source from which the income taxed by this act is derived.”
There are two reasons why the deductions claimed are not authorized by sub. (d). One is, that no income tax of any kind, nature, or description i§ authorized by its terms to be
Relators further contend that if the deduction is not •authorized by sub. (d) it is authorized by sub: (b), as being “ordinary and necessary expenses . . . actually paid within the year out of the income in the maintenance and operation
These conclusions make it unnecessary to consider the contention of the relators that actual payment of the taxes was not necessary to authorize the deductions because their accounts were kept upon an accrual basis, for the reason that, whether paid or not, the statute did not authorize the deductions. It follows, therefore, that the orders of the circuit court superseding the writs should be affirmed.
By the Court. — Orders affirmed.