New-York tribune., 1918-01-27
By Morris F. Frey
Ton Department, Guaranty Trust
Company Of NeW York

Company Of Ne,O York
r INDER the Federal income tax
I law of September 8. 1916, only
those individuals having net in :
comes in excess of $4,000 per annum
were affected by the personal income
tax According to the annual report Of
the Commissioner OF Internal Revenue.
recently issued, just 437.036 persons
fled income tax returns for the calen-
Oar year ended December 81. 1916. Un-
der tho war revenue act Of October 3,
1917, however, the amount Of exemp-
ton allowed to individuals has | een re-
duceJ and each citizen or resident Of
the United States, having q net income
OF $1,000, if single, or $4,000, if mar
riea, for tho year ended December 81,
1917, will be required to file return
on or before March 1, 1918.
Various estimates have been made OF
the additional number of returns that
will be fled on account of this lower
ing of the exemptions. Although it is
impossible to determine distribution OF
lnCOIlc WIFI dttJ NSSiCS Va oSNN NA e>J '
especially in these times Of abnormal
wages, an estimate that 100000 in
come tax returns will be filed this year
appears conservative. Assuming the
correctness Of such an estimate, there
will be upward Of 100000 people who
will make returns for the first time
this year, and in view Of the complex
ties Of the law much uncertainty re-
rardine its operation is to be expected.
Many Sources
OF Income
Returns must be filed when the net
income is in excess of $1,000 or $4,000,
according to the marital status Of the
individual; but this statement IS not
as clear as it appears to be, for the aes
income referred to is met income" as
defined in the law. Net income, sub
jcct to certain deductions, includes
Gains, profits and income derived from
salaries, wages or compensation 1or
personal service of whatever kind and
in whatever form paid; income from
professions. Locations, businesses,
trade, commerce or sales or dealings IN
real or personal property; income from
interest, rent, dividends, securities and
gains or profits from whatever source
derived.
Certain kinds of income arc, how
ever, exempt from the provisions OF
the revenue acts, and if ones income
we're derived from these sources no re-
turn would be necessary, or II part OF
it consisted of exempt income, 1t should
not be included in the return. For IN
stance, income from United States gov
ernment bonds issued prior to Septem-
ber 1, 1917, Federal farm loan bonds, !
state and municipal bonds is exempt
from taxations. Proceeds tf life in
surance policies, amounts received !
by the insured as return of premium
maid by him under life insurance, en-
dowment of annuity contracts are
EXEMPT from income tax, and so also
are property acquired by gift, devise
or descent, and the compensation OF
all officers and employees of a state or
any political subdivision thereof, ex-
cent when such compensation is paid
by the United States government 1t ,
is important to note that salaries OF
government officials are taxable, where
as salaries of state officials are not;
thus, if state official had taxable in
hot loco
than the specific exemption to which
he is entitled no return would be re-
quired.
The deductions allowed in comput-
ing "net income" in the case Of indi-
viduals are business expenses; inter
est on Indebtedness, except where it
was incurred for the purpose of the
tax exempt securities, ETC.; taxes paid
within the year. except income and ex
cess profits taxes and those assessed
for local benefits, such as paving,
street repairs. water supply, etc;
losses in trade and from fire, theft,
storms or similar casualties; losses not
incurred in trade to an amount not
exceeding profits from similar transac-
tions; worthless debts charged of dur
ing the year; allowances for deprecia-
tion and depletion, and contributions
to corporations or associations organ
izcd for religious, charitable. scientific
or educationa. purposes, or to societies
for the prevention OF cruelty to chill
drcn or animals.
Husband and Wife
May File Joint Return