Depreciation Under the Income Tax.

Abstract The article focuses on the accounting concepts involved in depreciation. Early reports show that provisions were made for fixed assets wearing out; and parliamentary debates also show that the joint-stock companies whose accounts were made up under the direction of auditors, were required to set aside a certain sum for the depreciation of the machinery. But the early Income Tax Acts did not provide for the depreciation of assets. When they did begin to take cognizance of this deduction it was through an allowance for repairs. England began her income tax, as such, by the Act of 1798, yet it was not until the act of the following year that even an allowance for repairs was made. The Act of 1806 made several changes in previous laws but the only one of interest was the elimination under Schedule A of the allowance for repairs to houses. That allowance was not reintroduced until 1894. The reason for the immediate abandonment, as stated in the Guide Book, was that it had been found to be inadequate and was demanded in many cases where the repairs were done by the tenants.