South Bend news-times. (South Bend, Ind.) 1913-1938, 1917-12-21

come.
When the ordinary produce of the
farm is sold the entire amount of
money received for il is gross in
come But when live stock is sold
there may or may not be a pur-
chasing price TO deduct before ar
irving at the gross profit on that
item. The method so far pursued
is 10 deduct the amount OF money
from the amount of money received
for live stock during the year. In
doing this the purchase price of GER
tain live stock is often deducted in
one year while the gross income
from this same live stock IS taken
up in another year. All earnings
received by Mr.. Doe from sales of
his produce or live stock, or his
earnings from some personal serv-
ice. goes TO make the gross income.
Mr. Doe is carefully studying
what losses he had during the year,
and what depreciation he may take
upon his buildings. machinery,
, horses, fencing, thing, etc. He
knows that there are certain expen-
ditures that can not come out as an
expense, because these expenditures
are for permanent improvements. It
is these permanent improvements
upon which he would determine the
depreciation as well as upon the ma
chinery, etc He will not forget to
take out his taxes. interest and loss
es
Mr.. Doe is married and has two
children. The new law allows a
married man $4,000 personal eXemp-
ton and $500 for each child under
Is years of age. and for helpless de-
pendents. But the old law is still in
existence, and under this law Mr..
Doe is allowed $4,000 exemption
plus the allowance for dependents.
Mr.. Doe has a net income of So
500, and being allowed a personal
exemption of $4,000, Will have an
income of $500 subject TO two per-
cent tax under the new law; and
entitled TO an exemption OF $4,000
under the old law, he will have ST.
100 net income subject TO another
two percent tax under that law. This
taxation for normal tax may be ar
rived at by taxing the first $4,000
above the $4,000 exemption at two
percent. and the remainder of the
net income at four percent, as both
laws apply when the larger eXemp-
ton has been reached.
But the new law provides for an
additional tax on all individual net
incomes over $1,000. The first So
500 over $4,000 pays one percent ad-
ditional tax; the next $4,000, two
percent: the next 800. three per
cent the next S2.5OO. four percent;
the next $4,000, FIVE percent; the
next $4,000. eight percent. and the
next 100000. 10 percent additional
tax. These rates are continued up
To SIS percent additional tax. when
additional taxes under both laws
now in force are CONT ined.
John Doe has but $500 over the
$1,000 limit. and therefore will pay
amount, or s..
To repeat, John Doe has $500
net income. and has 81, exemp-
ton when calculating the two per
cent tax under the new law. and
400 exemption when calculating
the two percent tax under the old
law. He would therefore pay $40
normal tax on the first $4,000 over
the first exemption. and S44 normal
tax on the remaining $1.l0o.
He would also pay 50 additional
tax on the excess net income over
$4,000
Had John Doe received $500 net
income. he would have paid two
percent on $4,000. and four percent
on $500 as a normal tax. IN addi-
ton 10 that he would Day SIS sur