The Denison review. [volume] (Denison, Iowa) 1867-current, 1914-02-25
Income Tax Problems.

(QueStlOnS answered Dy LOU!
Murphy, Collector of Internal Revenue
for Iowa.
(The answers are not presented as
conclusive, but as opinions merely
because it is manifestly impossible
to forecast decisions of the treasury
department on questions certain tt
arise under the law
@. received $4,000 income from
all sources during the ten months
March 1st to December 81, 1913 The
law says that only persons having q
net income in excess of $4,000 veal
shall make return. Does this mean
that as for the ten months referred
to. shall be required to make no re
turn?
A. Persons whose net income from
March LIST to December 3lst last
amounted to $4,000 or more are sub
ject to the income tax and must file a
return of their net annual income for
the year 1913. This decision has been
announced by the treasury depart
ment. The decision in part is as fol
lows:
'Since the return Of annual net in
come for the year 1913, as applied to
individuals, is for. but five-siXths of
the calendar year. and as the law pro
the basis of llve-siXths of the year, it
is held that individuals whose net in
come is $4,000 or more for the ten
months constituting the taxable peri
cd of 1913, shall make returns OF an
nual net income in accordance with
the general provisions of the law COW
ering the 1913 taxable period"
@. Must l on my own motion
make report of my income for the
period March LIST to Dec. 81, 1913, in
elusive?
A. Every person having an income
of $4,000 exclusive Of income receiv-
ed from government bonds or bonds
OF a state or political subdivision
thereof, or as an officer or employe Of
state or political subdivision there
of during the period March LIST to
December 31st, inclusive must make
return of income. After 1913 all per-
sons having income, as qualified, of 49,
900 year, must make return. The
person having such income who fails
to make return for 1913 before March
l, 1914, is subject to a penalty OF from
$40 to $1,000.
Q. Are dividends from life insur-
ance policies taxable?
A. Dividends derived from paid up
policies and which are in the nature
of .annuities, are subject to the tax,
but dividends which decrease by their
amount the annual premium to be paid
are not taxable.
@. Must an executor of an estate
make return, and what is his eXemp-
ton?
A. If the income of an estate is in
excess of $4,000, return must be
made. The estate as such is not en-
titled to an exemption; however each
beneficiary may claim against his or
her share of the income arising from
$4,000, as the case may be, by filing
q certificate with the executor or
trustee; for 1913 the exemption is
$4,000 or $3,333.33.
Q. When must the return be made,
to whom and when must payment be
made?
A. The return must be made to the
collector of internal revenue, at Du-
buque (for residents of Iowa. not
later than March 1, 1914. Payment
must be made on or before June 30,
1914.
@. How much exemption has a
widow with two minor children?
A. For the year 1913 she has an
of ,nn ffnr
900 yearly There is no exemption
allowed for children or other depend
ents.
G.. Must corporation paying the
normal tax on it's net earnings file GER
tificate of exemption with those of it's
tenants from whom it receives rent,
or individual debtors, from whom it
receives interest in excess of $4,000
yearly.
A. No; that requirement applies
only to individuals.
@. Must soldiers pensions be re-
turned as income, and are they tax
able?
A. Yes.
@. l saw in the Chicago Tribune
under date of January 18th, that "a
corporation pays the tax from Janu-
airy LIST to March l, 1913, with an ex-
emption of one-sixth of $4,000 and
from March LIST it pays an income tax
and is not entitled to any specific ex-
emptiOn, but is entitled to deduct five
sixths of the annual deductions set
forth in subdivision 3 of paragraph
G of the act" Is this right?
A. It is not. The income tax law
repealed that corporation excise tax
law which permitted an exemption of
$4,000. A special excise tax was re-
enacted for the months of January
and February, 1913, for which period
the net income shall be ascertained
in the same manner as it shall be as
certained for the balance of the year.
I quote from the law: "And provided
further that a special excise tax with
respect to the carrying on or doing of
business equivalent to 1 per centum
upon their entire net income shall be
levied upon corporations,
etc."
@. AS I understand it, my income
must be $4,000 year over and above
expenses before l am obliged to make
return of my income to you. Am
right in this?