Cedar Rapids Gazette (Newspaper) - October 30, 1974, Cedar Rapids, Iowa
Tax advantage clarified
‘Depletion’ cutoff: an absurdity
The Cedar Rapids Gazelle Wed., Oct. 39, 1974 7/^
(The writer is a retired systems and procedures analyst with Collins Radio, now in the business of tax return preparation.)
By David Prudden
Depletion seems to bt* something leu people understand, but everybody has ail opinion about. The way many polit) elans are taking advantage of tins lack of understanding is reminiscent of the story about the head of a private school who kept his enrollment up by warning parents that in the public schools the boys and girls were required to matriculate together and use the same curriculum
The principle of depletion is easily understood by considering the ease of a lumber mill which buys the timber rights to a tract of land containing one million board feet of timber for $100,000 Dividing 100,000 bv one million gives an answer of IO. so IO cents per board foot is the mill’s cold for the standing tim-lH*r. which the trade would express as $100 per thousand board feet. The mill keeps a record of the quantity cut and multiplies that by the cost per thousand to determine how much it has depleted its value of standing timber If it cuts 2541 (MHI feet in the first year. that comes to $25,(NMI
In figuring its profit or loss for the year, the mill writes off $‘25.non as depletion It includes this $25.OOO with the other (lists which are subtracted from sales amount to find profit or loss It also reduces the asset, standing timber. on its books by $25.(MMI, so that its statement shows $75,(NMI as the value of the timIkt it owns at year-end
That is the complete principle involved in depletion. The problems and controversies arise in applying the principle.
Timber is simple because one can
To the Editor
Election day is just around the corner — our chance to vote for a beautiful zoo The new barless /chi will be a place to be proud of. Why should we spend money on gas to travel to another state to see somebody else’s zoo when we can have one right here? Our city will benefit in more ways than one
First, we ll be able to keep our lion cubs here where they belong. We ll finally have a great place to take out-of-town guests. Our children will be* able to see all different species of animals, learn where they are from, how they live. The chances of any of us getting to Africa to see lions, elephant, and the giraffe art* very small. Seeing these animals on television is fine, but they are bigger and more beautiful in real life.
Those* who think it is cruel to confine* wild animals should stop and think a minute. These animals will have plenty of room to romp and play. They will never have to worry about their next meal or drink They will never have to fight to survive. Poachers and hunters cannot get at them. They will in* free* to live long, contented lives
Mrs .James Podgorski. jr H705 Brentwood drive NE
To the Editor
Congressional Candidate Michael Blouin's action in having a Dubuque printer violate union rules by printing a union label on material not actually printed in his shop appears to In* part of a pattern.
We have two union television stations iii the Second congressional district. WMT-TV (channel 2) and KRCG-TV (channel 9), both of which are involved in the production of television commercials. Yet. Blouin went out of the district and contracted with a nonunion television station, WTM-TV (channel Hi in DavenjMirt to product* his T\ commercials.
It s ironic that all that money Mr. Blouin has received from organized labor has been used to purchase services from nonunion shops.
Iceland Loeffler 2455 First avenue SW
To the Editor
After following almost daily the fantasies of Tom Riley's supporters, I feel compelled to write this letter
Those people seem to be making a concerted effort to destroy Miko Blouin's reputation as a responsible |H*r son and legislator Their letters obvious ly follow a set format and are so similar in style one would almost think they had been written by the* same person
As I read these letters, I have my own fantasy of a (lerson somewhere in
see how much timber is on a plot of land being sold. Purchase* of every other kind of depletable asset is a pig-in-a-poke situation. What is being bought is underground and cannot lie measured accurately. Thus the amount which should be charged as the cost of the* material removed each year can only be guessed at.
The* law provides for two methods of doing this guessing. You can choose either one*.
The first, called cost depletion, calls for the operator to guess how much gravel is in the pit, how much ore is in the mine, how much oil is in the hole, or whatever Then he does just as the* mill did He divides the amount he paid by the guessed-at quantity of gravel, coal. ore. oil. or whatever to be extracted and calls that his cost per unit. His depletion each year is that unit cost multiplied by the number of units produced, until the cost has been recovered, lf the guess was too high. the cost not yet charged off as depletion is a loss in the year the product is all gone.
The second method is to assume that some fixed percentage of the selling price is a good guess as to the* cost. Then the operator merely multiplies his gross receipts by the percentage specified to determine his depletion. This is known as percentage depletion. If cost depletion would give a larger amount, it must In* used.
Riley’s headquarters doggedly typing letters to be signed by friends so that the People’s forum will be loaded with anti-Bloum trash
If this could be true it would not only be a dishonest act perpetrated against Mike Blouin but also against every reader-voter in our area
Hon Bauserman 3515 (' avenue NE
To the Editor
Sen Tom Riley was quoted in the Des Moines Register of Oct. 22 as being opposed to national health insurance: "Riley said he would prefer instead to build upon the existing private health care system in the nation and preserve as much private health insurance as possible.”
The Cedar Rapids Gazette of Oct. 23 listed Senator Riley’s campaign receipts. Among these* is $5,000 from the Iowa Medical Action Committee.
Question Since the Iowa Medical Society and the American Medical Assn. also oppose national health insurance, and since the AMA has been listed in newspapers as having more money to spend on lobbying than any other group — could there lie any connection be-tween the above two facts? Is this Senator Riley’s idea of campaign reform?
The Iowa Medical Society should remember that when a bill to expand the practice of chiropractors was lobbied through the Iowa legislature, it was Senator Riley who voted for that bill, while Senator Blouin voted against it. Are they more interested in their financial status than in quality health cure for Iowans’’
Helen (J. Reichart Monticello
To the Editor
I feel The Gazette could In* of great service to the homemakers of this area if they would give more tips and reel|>cs of ways to feed our families well while keeping in mind the rising food costs Many times I feel discouraged with expensive recipes I find in the paper During these times we need help iii lower costing yet nutritious foods
During World war ll many good recipes came out for such things as frosting made without sugar. Can you help us during these troubled times?
Mrs. Leroy Nelson ‘299 Sixth avenue, Marion
(Editor's note- For tight budget cooks, The Gazette s new Wednesday column, 'The Butcher", gives tips on stretching meats which are frequent specials. It offers recipes for making poultry and meat serve many people. The Sarah Shopper cartoon feature, also appearing each Wednesday, attempts to teach consumers how to shop wisely at supermarkets and save money The food stones with pictures which appear regularly are chosen to appeal to a wide variety of cooks with a variety of budgets )
There are some complicated rules limiting percentage depletion that may be taken The law lists over HIO items, from anorthosite to zinc, specifying the percentage to be used for each The percentages range from 5 percent lo 22 percent. Among tin* better-known items listed are salt, coal, asbestos clay sand, peat, and limestone
In Hie las! year or so. concentration on oil has led to some loose usage of terms. When “depletion allowances" are spoken or written of, what is meant is "percentage depletion of oil well-,
It is customary to have a sharing arrangement between the landowner and the operating company, which means that the farmer from whose land the oil, coal, or whatever is being extracted can use part of the depletion allowance in figuring his profits.
It is obvious that a depletion allowance is the specified method for an operator to record as costs the moneys already spent to purchase* something and, at the same time, to reduce the book value of his investment iii property. That is why the commonly-heard proposals to "eliminate depletion allowances” are so ridiculous. If depletion were not recorded, companies would fie putting out statements still showing as assets the original price paid for what have become empty holes in the ground This is highly illegal
There is a belief sometimes stated that the purpose of depletion allowances is to finance new exploration. T his is a distorted view of common practice New exploration is constantly needed and costs money. The faster a company can recover its investment in a producing oil well, the more money it has available to finance the exploration
In retrospect it appears that oil companies might have fieen wiser to price cheir products a little higher and thus be less dependent on depletion allowances to finance their expansions
Ford and Rocky
To the Editor
Last Aug. 20, President Ford nominated Nelson Rockefeller for vice-president. Ile said he picked Rockefeller after a long and very thoughtful process.” He said it was a "tough call for a tough job" and the choice was a "difficult one.”
Correction: The weekly magazine. The Review of the News. Belmont. Mass., informed us on Nov. 28, 1973, that Ford is, with the Rockefellers, a member of the conspiratorial Bilder-berger group and has described himself as a dyed-in-the-wool internationalist.
Washington columnist Paul Scott agreed earlier (on June 2(1, 1973) when he said: “The star player in the unfolding Watergate drama is still in the wings. He is . . . Rockefeller, whose sights are set on becoming President of the U. S. . . . Whether Rockefeller, even with his vast economic, social, and political power, will be able to pull off this managed power grab is still a matter of the most chilling and exciting political speculation.”
So even after Ford was confirmed as vice-president, Washington continued to buzz with talk about Rockefeller. Intelligence specialist Frank Capel! reported in The Review of the News of Jan 2. 1974: "Informed Washington sources
believe that because of new disclosures concerning Nixon's campaign and |x*r-sonal funds, the President will be forced to resign within the* next three to four months. Speculation is that, upon being named President, Gerald Ford will name . . . Rockefeller as vice-president.”
So it really came as no surprise at all that Ford “fin lly” decided upon Nelson Rockefeller as his vice-president. It was planned that way, just as The Review of the News reported. When you remind your friends of that, In* generous; tell them that they may subscribe to the most authoritative weekly news magazine for just $1(1 a year
Thomas Correra Houle 3. Marion
To the Editor
We of the Coho C hristian school s network government class have taken a poll of alniut 225 people on two inipor-tant issues, and we feel you and others may In* interested in hearing the results.
The first question was "Should Nelson Rockefeller In* confirmed for vice-president in light of the recent disclosure in gifts of money?” The results were H7 percent no and 33 percent yes
The second question was "Should Russia lit* granted most-favored-nation status?" The result was 89 |>ercent no and only ll percent yes, alniut an 8 to I ratio We feel the results are very interesting, and comment would Im* welcome
Pain Armstrong 11(19 Maplewood drive NE
LINN COUNTY ATTORNEY
KOPECKY IS QUALIFIED
Experienced in Criminal Felony Trial Division
Chief Attorney to Grand Jury more than three years
Counsel to Social Welfare
Assistant County Attorney 7 Years
Continual Interest in just prosecution
Paid for by the Committee to Elect Kopecky Linn County Attorney — Pinkie Primrose and Tom Shea, Co-Chrm.
I Weft lit Cherte-It
Reg. 599 pkg.
Smooth Orlon* acrylic str etch nylon Mony colors
It Dupont Mo* •M
Comportment* With Accessor
4-01.* DAZZLE’ KNITTING YARN
6-FOOT VINYL FLOOR RUNNER
Mc DONALD'S OR SKY COMMANDER
Coch Charge lf
Rey I 2 4 Pays
Creston* acrylic nylon Mothproof washable
6 tee* long 71 int he* wide Heavy doty Cleo! or colors
McDonald s Restaurant .si" ill accessor UIS and I
play people 7 cars Plastic tai ages 3 to B yrs Big lim Sky Command*! ,et headquarters wit’
equipment la* livmq in. an search and fescue
TEENS PRINT SLUMBER BAG
Beg I 91
Unbrushed en- fee* Stool i*ody to point
Bey lid/ 4 Days
Cot’')!) < i„*»i polyester hi! Makes ofcWnMO comforter
W A thor*
A ti DINIlUSPiClM
6*( onw | ff0f Ai eof Loaf Sandwtih/Whipped Potatoes, Gravy... 84c
S. S. K ■ I $ GI COMPANY