The Placer herald. [volume] (Auburn, Placer County, Calif.) 1855-1991, 1863-04-18
INCOME TAX CIRCULAR.
Important Directions as TO Making on,
Returns to the Tax Assessor.

The near approach of the time when assess
nents Will be made upon Incomes, under the
ErciSe Lar, and the frequent inquiries made
relative to the mode and manner OF arriving at
correct statement induces the publication of
! some general rules for the guidance OF taxpayers
in making up the yearly statements.
The Tar upon Incomes is a tax upon the an-
| nual gains and profits of erery person, whether
derived from property. rents, interest. dividends.
salaries, or from any pro ession, trade, employ
ment or vocation, carried on in the United States
or elsewhere. The first tax is for the year 1862
commencing January st, and ending December
3ls, and is upon the actual remnuerative trans
actions made and completed within the year.
When real estate is conveyed, merchandise
or personal property delivered, transactions are
sufficiently complete TO determine the amount Of
profit gained, or loss sustained.
Actual losses made within the year. will 90 to
reduce profits made within the same period.
Enclosed transactions. when delivery has not
transpred. Enclosed adventures. and merchan-
disc in transit, unsold will be considered as on
hand, and estimated at cost.
Stocks, purchaSed and uuSOld, should be val
ued at cost. whatever the market value may hap
pen to be on the 3lst Of December, as actual
sales only can fix the amount of profit or loss Gan
exception to this rule would occur where stock
has become absolutely worthless, in which case il
should find its appropriate place in profit and
| loss account.)
| Unsettled accounts should be counted as good
and profit estimated as actual upon them as much
as though the money had been actually received
within the year.
| The interest upon unmatured notes and mort
cages should be counted as actual income up to-
! December 3lst OF each year.
Real estate in the hands of dealers, whether
advanced or deprecated, should be considered at
cost until actually sold. meantime the rents. or
actu,l receipts, only can be classed as income.
In short, real estate and personal property,
10th 4 ,tn al ,,l
cost. does not increase or diminish income until
actual sales shall develop profit or loss except in
case the proparty shall have become absolutely
worthless within the Year, The rents, interests,
dividend profit arising from property while
! held.-is all that can be counted as income till
sales take place.
! Book accounts, notes and mortgages the result
of transactions in the year 1862 if finally result
ing in loss. will be counted as loss within the
year in which the account note or mortgage.
shall actually be settled, ard will go to reduce
! the profit OF said year.
From the gross amount of annual gains and
profits received, deductions may be made rs
! follows:
1st.--From Rents of Real Estate--All yearly
! expenses. Except permanent repairs or improve
| ments) such as National, State and local taxes,
! insurance, interest actually paid upon mortgages,
commissions for collecting rent, AID other Incl
| dental expenses. Permanent repairs of buildings
! and sidewalks are considered improvements and
| their cost is not to be deducted from receipts
! Cash paid for improvement and repairs oil streets
in the city of San Francisco, may be considered
as a local tax. and subjects of deduction.
2d--From the Products of Lands Rent paid,
| interest upon mortgages, and all necessary cash
| expenses for labor and teams actually employed
in producing; also cost Of packages and bags,
transportation, freight, commissions, and other
| market expenses.
3d.--From Business--All legitimate expenses.
such as rent, clerk hire, brokerage interest actu-
ally paid upon capital employed in business, or
necessary to its prosecution, drayage, storage,
insurance taxes, aud all actual losses incurred
within the year, in the legitimate prosecution of
said business. Those engaged in mechanical
and manufacturing pursuits may, in addition,
deduct reasonable amount for wear and tear of
machinery and tools In conclusion, accounts
made up according to the well recognized rules
of systematic bookkeeping. and modified to con-
form to the specific requirements Of law, are the
proper guide for business men In making up their
statements.
4th--From the receipts from Vessels or Steam
ers--Insurance, sailing expenses, taxes interest
actually paid out commissions paid agents, pilot
age and harbor expenses. Permanent repairs
should not be deducted. but reasonable allow
ance made for yearly depreciation.
5th.--From Salaries Trades, Professions and
| Lahor.-TaXes, rent of Offices, shops places of
business cash paid Tor clerks or workmen, and
incidental expenses necessary to carry on trades
or professions.
6th.--Alowance for Living.--Erom the income
of all persons engaged in any trade or occupa-
tion before named. and others subject to tax,
cash actually paid for house rent and an addi-
tional amount Of 5000 can be deducted this last
amount being designed as an allowance for per-
sonal or family expenses.
Homcsteads are not taxed unless yielding rent
or profit.
Unproductive property is not taxable.
Husband and wife owning separate property
will only be entitled to combined exemption of
5000
Guardians must make returns of the income of
the property Of minors.
Parties holding property, stocks or bonds, as
agents in iduciary capacity, and collecting or
receiving rents, interest, divident or profit, for
persons in foreign Countries, or other States,
must make statements and pay taxes Except in
case OF local representatives of parties residing
in other States, or other parts of this State, out
of this district, in which case the agent or repre-
sentative may declare under oath that the par
ties they represent have been assessed elsewhere
in the same year, for income duty, under the
authority of the United States.) Such parties
shall tGcreupon be exempt from income duty in
this district But all foreign property holders
and Americans residing abroad, must, through
their agent. make returns upon the whole amount
of income.
The receipts from unfinished works, that are in
process of improvement when such receipts are
used and absorbed for the rermanent improve
ment of such works, such receipts must be classed
as income and pay tax. Persons, comtanies or
corporations, that use receipts or profits to con-
struct new, or to permanently extend or improve
old works, must pay tax upon all such receipts
or profits used for such purpose.
Interest derived from notes, bonds or other
securities of the United States, pay only l ! per
cent. tax.
Co-partners in business can make statements of
pIoft on the co-partnershp business, but IN such
case individuals of said co partnerships having
individual incomes, separate and apart from the
co-partnership, must make separate returns for
such indiv vdual income.
All persons whose aggregate income from all
sources exceed 5000, are subject to tax of 3
per cent upon such excess if their income is
less than $4,000; if over $4,000, then per