The Holbrook news., 1918-01-11


 for resale but not if purchased for breeding purposes. The far mer in the case we have just stated must turn in the cost of the SOW as apart from the pigs at the time of the purchase. The cost of the SOW must be included in the permanent investment ac- count and not as the deduction from the gross income. The profit on the pigs must be in- cluded in the gross income. The expense of keeping and feeding the pigs may be added to the original cost in determining pro- fit, or they may be omitted here, and included as part of the gen. eral expense of the farm.
 Take the case of a person on a salary. Suppose a man earns $250.00 a month, is married and lives with his wife. We will say that his travelling expenses are 30 cents a day to and from his business; he is member of club that costs him $100 a year; his lunch expense is 50 cents daily. Now outside of these items he has no business expen- ses and the question we want to determine for him is how do these expenses figure in his h. come Tax Schedule. Now the law states that operating ex- pense is one of the first items to be deducted from ones income to determine how much taxes they are to pay. A man may spend a great deal of money for clothes, education and the like. but unless these have a direct bearing on his business. they cannot be deducted. If the education is for the business, or the clothes, uniform or some thing of that order, having a direct bearing on ones occupa- tion. it may be deducted. There fore in our example stated above the person will deduct the tray cling expense as a business ex- pense; the club dues are a per sonal expense and a permanent investment and will not be de- ducted. neither will the lunch expense because it is a personal living expense.
 "Let US take one more ex- ample; that of two men in part nership in the grocery business. During 1917 each partner took S10O a month in cash and the groceries for his family out of the business. At the close of the year they had placed to the partnership surplus account $1,- GOO. There was an additional $2,000 outstanding, owed by customers for groceries purchas- ed during the year. The ques- tion is : How will these items affect each partners Income Schedule. Now the law states that salaries and commissions and other forms of compensation for services are considered in come when received, regardless of when earned; also that living quarters, board, lodging, rent or expenses allowed in lieu of sala- ry is income. The law is clear that accounts receivable are to be listed as income and further more states that partnership gains are income when earned. whether distributed or not. Therefore the answer to the above condition is that each partner must determine the value of the goods he consumed and include the amount as part of his income. Each partner must also include one-half of the surplus account, which in this case is $500 and one-half of the accounts receivable which again in this case is $1.O0O. as gross income. in addition to the S1, 200 drawn out during the year which we stated In our ex- ample.
 These cases are merely illus tratiye of how fair and indiscri- minating the intention of the law is. It has been estimated that the United States this year will raise twenty per cent of the War Revenue from the war tax