Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1913-11-20
INCOME TAX PROBLEMS
Questions Answered by Louis Murphy, Collector of Inter-
nal Revenue for Iowa.
later than March 1st. 1914.

later than March 1st. 1914.
9. Would a widower, whose wife died
within the year for which he makes re.
turn, be entitled to the $1,000 exemption
for wife?
A. No.
Q. Assuming a person lac an income
OF $500 from a corporations; that he also
mad an income of equal amount from
property In the hands of a fiscal agent
ana no other income, would he need to
make a return of his income?
A For the first year. yes. After that
no. -,.
q. The law forbids a bank to deduc,
the tax from coupons payable at the
source when accompanied by certificate
OF ownership. How will the bank get back
the amount of the tax when In the course
OF business 1t has credited It's customers
with the full amount of coupon, but only
received at the source the amount of the
coupon less the AK?
A. 1t will have to cease crediting such
items to customers and take them only
for collection, crediting customers. after
collection has been made, with the pro
ceeds.
y. What statement, II any, will be re-
CURED of those with families, whose In
comes are less than $4,000 per annum?
A. None.
@. We are a national bank. Please in
struct us how to proceed with regard to
collection OF taxes at the source.
A. First-As to bonds and mortgages,
or deeds of trust, or other similar obi
cations of joint stock companies, corpor-
atons, associations and insurance COM
panies, the interest and principal OF
which are payable by a bank, the bank Is
the source. and It must deduct from the
interest thereon the normal tax OF i per
cent unless the are accompanied
by a certificate Of owner nverring that
he. she, or 1t. Is not taxable.
Second-As to coupons of mortgages
not the obligations OF corporations, joint
stock companies, associations and insur-
ance companies, interest and principal of
which are payable at the bank, the latter
Is obliged, as of November / and there
after to deduct the tax when the interest
on such coupons to any one person ex-
ceeds 5000 q year, unless such person or
corporation files with the ban certih-
cate of exemption. For the remaining
months of this calendar year the bank
will make no deductions in these cases un-
less the payments shall be In excess of
5000; and 1t will make no deduction only
If no certificate OF exemption is filed with
it.
Third-Where coupons are presented to
1t for collection (and 1t is not the source,
that is. 1t is not set out In the bond that
interest and principal are payable at the
bank and the bank Is not a designated
agent of the first source, or corporation)
the ban must deduct from said coupons
the / per cent normal tax, and Its failure
SO to do renders 1t nabl for this tax.
1t u attach to the oupon its own
certificate, giving the name and address
of the nynar n /. nnrann r1raSant1rp on,nnna
or interest orders Un the case Of regis
tered tnteres) II the owner is not known
with a description Of the coupons or in
terest orders; also setting forth the fact
that it Is Withholding the tax upon them.
1t should require persons rendering such
coupons or orders for registered interest
to satisfactorily establish their identity.
FOurth-Bonds which the bank may
| own are not taxable at the source; tina
Is, thevdebtor should not deduct the tax.
But the debtor Is required to deduct 1t
unless the bank shall present certificate
setting out that it Is exempt from the
payment of tax because it Is O bank, and
as such taxed on Its net earnings. There
is a prescribed certificate form for this
also.
F~ifth-UntN November 16 coupons pre-
scented to a debtor need not be accom-
panied by certificates in any form ex-
lcept the form OF temporary certificate
prescribed. II the tax has been taken off
at the source or any OF a banks bonds
the bank should fill out temporary certi-
fcates and END them to the source to be
attached to Its coupon. It then has until
February l. 1914, to send certificate to the
source indicating 1t Is an organization not
subject to tax on interest at the source,
when source will return tax withheld to
It. Or having ownership certificates.
which are also claims OF exemption from
the tax at the source. 1t may now attach
them to Its coupons 1t must do this after
November is.
9. What Is the method OF establishing
exemption
A. From total income first deduct speci-
flo exemption, OF $4,000 (A,e00 II married).
Then the necessary expenses actually paid
u carrying on any business, not including
personal. living. or family expenses; sec
ond, all interest paid within the year by
a taxable person or indebtedness; third,
all national. state. county, school, and
municipal taxes paid within the year. not
including those assessed against local
benefits; fourth. losses actually sustained
during the year-incurred In trade or aris-
Ing from fires, storms or shipwreck, and
not compensated for by insurance or 9TH
erwtse; fifth, debts due to the taxpayer
!~actually ascertained to be worthless and
charged off within the year; sixth. a
reasonable allowance for the exhaustion,
wear and tear of property arising out of
its use or employment In the business. not
to exceed, In the case Of mines, S per cent
UNI of the gross value at the mine OF the
output for the year for which the compute
ton is made, but no deduction shall be
made for any amount of expenses OF re-
storing property or making good the ex-
Ihaustion thereof for which an allowance
Is or has been made: Provided, that no
deduction shall be allowed for any amour,
paid out for new buildings. permanent I'M
provements. or betterments, made to in
crease the value OF any property or estate;
seventh, the amount received as dividends
upon the stock or from the net earnings
Of n corporation. joint stock company,
association. or insurance company which
Is taxable upon It's net income as herein
after provided; eighth. the amount Of IN
come, the tax upon which has been paid
or withheld for payment at the source
OF income, under the provisions OF thia
section. provided that whenever the tar
upon the income OF . person Is required
to be withheld and paid at the source
AZ hereinafter required, II such annual
Income does not exceed the sum of s., 600
or y not fixed or certain, or Is INDEFINITE
as 70 amount or time OF a~ccrual. the Same
! shall not be deducted In the personal re-
turn Of such person.
9. Must one establish exemption In or.