The Nevada County picayune., 1914-03-20
HOW FARMERS SHOULD
 COMPUTE THEIR INCOME
Incomes Under S3,000 Not Af- fected by Income Tax. Method of Computing Net
 Income Explained.

the income tax, and under the law each individual must make return to the Internal Revenue collector of his district on or be- fore the first day of March if he has a net income of 5000 or over e, 800 for the ten month of 1913. While the interest of most farmers in this subject is purely academic. the Department of Agriculture has received in- quiries indicating that some wish to know just what is required of them under the new law.
 The income tax law of October 3, 1913, places a tax of 1 per cent upon all net incomes of over S3,000. with an additionaLtaX on incomes of $20, 900 or more. The first question arising in the minds of most people is what constltut- es a net income. For a man re- ceiying a regular salary, or busl- ness man with a good system of bookkeeping, it is easy to deter mine 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 expendi- lures, it is more difficult to cal culate his net income.
 In order that farmers may be posted on the income tax as it may concern them, the follow ing information has been furnish ed by the Internal Revenue Bu- reau of the Treasury Department:
 In general, an income consists of amounts derived from salaries, wages, or compensation for per sonal 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 other income frominvestments. These items constitute gross in- come, from whicS there should be deducted the expenses of carry ing on the business; interest paid on indebtedness: worthless debts charged off: losses by fire, storm or shipwreck, not covered by in- surance; exhaustion. 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 or acorporation which has already pail the tax on it's earnings.
 The provisions regarding net incomes of $3,000 apply only to unmarried persons, or to married persons not living with wife or husband. A husband and wife living together are entitled to an exemption of 5000 on their az gregate income. This means that in case the wife has a sepa- rate income, if this added to the husbands income amounts to $4,0OO the total is subject to the tax; or, if the wife has no sepa- rate income, the husband s ln- come is taxable only in case It reaches $4,0O0. But a return must be made if the aggregate insome of both is $2,500 for tn. wear 1913. The joint exemption, however. would be $3, 332, B.
 In arriving at his net income the farmer should start with his gross income. This would consist of any items of the kind above enumerated, and especially all receipts from the sale of products of every description rom tho farm. This would include ali money received from produce and animals sold. and for the wool and hides of animals slaughtered, if;ne wool and Gidr are sold; but he may deduct from these items the amounts actually paid as purchase money for the