The commercial. (Union City, Tenn.) 190?-193?, 1914-03-06
COMPUTE THEIR INCOMES
Incomes Under $4,000 MOI Affect
ed By Income Tax.

idltlCK 10 ~ AOibuhAsO % W AuNN = ASs
income Of over 50, 900 year in case he
is bachelor, or $4, 900 il married, he
is subject to the income tax, and under
the law each individual must make re-
turn to the Internal Revenue Collector
OF his district on or before the first day
of March il he has net income OF
So, 900 or over $500 for the ten
months of 1919. While the interest
OF most farmers in this subject is pure
ly academic, the Department Of Agri-
culture has received inquiries indicat-
ing that some wish to know just what
is required OF them under the new law.
The income tax law of October 8,
1913, places tax Of per cent. upon
all net incomes Of over $4,000. with an
additional tax on incomes of $50, 900
or more. The first question arising in
the minds Of most people is what con-
stitutes a net income. For man re-
ceiving regular salary, or business
man with good system of bookkeep-
ing, it is easy to determine whether or
not his income is taxable. But for the
farmer who receives no stated income,
and who often fails to keep accurate ac-
count OF receipts and expenditures, it
is more difficult to calculate his net
income.
In order that farmers may be posted
on the income tax as it may concern
them, the following information has
been furnished by the Internal Revenue
Bureau Of the Treasury Department:
In general, an income consists OF
amounts derived from salaries, wages,
or compensation for personal service,
paid in any form; also from professions,
business, sales or dealings in property,
or from. rents, interest on bonds or
mortgages, dividends on stocks, or 9TH
er income from investments. These
items constitute gross income, from
which there should be deducted the exA
pense OF carrying on the business; inter-
est paid on Indebtedness; worthless debts
charged off; losses by fire, storm or ship
wreck, not covered by insurance; ex-
haustion, wear and tear OF property,
and any income upon which the income
tax has already been deducted at the
source. as, for instance, dividends on
the stock OF a corporation which has
already paid the tax on its earnings.
The provisions regarding net incomes
OF So, 900 apply only to unmarried per-
sons, or to married persons not living
with wife or husband. A husband and
wife living together are entitled to an
exemption OF $4,000 on their aggregate
income. This means that in case the
wife has separate income, il this add
ed to the husbands income amounts to
81, 900 the total is subject to the tax;
or, If the wife has no separate income,
the husbands income is taxable only
in case it reaches $4, 900. But return
must be made II the aggregate income
OF both is $500 for the year 1918.
The joint exemption, however, would
be SO, 1888.
In arriving at this net income the
farmer should start with his gross in
come. This would consist OF any items
OF the kind enumerated, and especially
all receipts from the sale OF products
of every description from the farm.
This would include all money received
for produce and animals sold, and for
the wool and hides OF animals slaugh-
tered, il the wool and hides are sold; but
be may deduct from these items the
amounts actually paid as purchase
money for the animals sold or slaugh
tered during the year. When the ami
mails raised by the owner are sold or
slaughtered, however, their value should
not be deducted.
From the gross income there should
be deducted amounts OF money actually
paid as expenses for operating the farm
and producing the farm products, live
stock, etc. This would include hired
farm labor, farm supplies purchased
that are necessary TO carry on the busi-
ness and not an investment that repre-
sents principal, etc. Expenses for re-
pairs on farm property may be deduct
ed, provided the amount deducted does
not exceed the amount spent for such
repairs during the year for which the
return is made. The cost Of replacing
tools or machinery may also be deduct
ed 10 the extent that the cost OF the new
articles docs not exceed the value OF the
old. No deduction may be made for
the cost Of additional farm machinery,
(. L III -. A.