Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1918-01-25

| der the laws of the state in which
the accident occurred, he received
$4,000 on account of the injury he
suffered. Must the amount thus re-
ceived be reported as income?
A.-Yes, any amount received un-
Ger an Employers Liability act or
Workmen's Compensation act, or
any other similar act or as the re-
suit of a settlement or compromise
Tor pain and SUFFERING" Is held TO
be such income as is subject to the
| Federal income tax. This ruling is
also applicable to any amount re-
| celVed under the terms of an acci-
oent insurance policy.
"a" is employed by a cor
poration at an annual salary of $3,-
900. The corporation, beng in IL
nancial straits, only paid "A" $4,000
during each of the years 1915 and
and 1916. In 1917 "A" received his
salary in full plus the balance of the
salary due him for the two previous
years. Must he include the full
amount received in 1917 in his re-
turn for that year?
A.-Yes. Five thousand dollars
| should be returned. and that amount
will be subject to income tax at the
rates prescribed for the year 1917.
Income of Children at Home
Q.-I have two children who live
at home and are regularly employ
| ed. One is IL years old, the other
Il years old, Am l required to in
kciGde the amount of income which
7 accrues to each during a calendar
year in my own personal return?
A.-As the first child has not
| rpnphnn its inritV iG Gfil1
gally under your control, the amount
Of. its income is to be included in
your personal return and is subject
| to tax in your hands. The income
of the child which has attained its
majority is not to be included in your
return, and is only subject to tax in
the hands of that child.
Q.-Is an individual contractor
| who constructs a public highway, n
bridge, drainage system, ETC., for
the state, county or a municipality,
held to be an employe of the politi-
cal subdivision for which the work is
| performed?
A.-No; and therefore the income
tax derived from his contract is not
exempt from the Federal income
! tax.
! Q.-May widower or widow
|
the latter part of the tax year, say
| December 26, claim the full amount
! OF personal exemption allowed to u
married person?
| A.-No; the martial status of the
| perscn rendering the return as of
December 81 or the tax year deter
| mtneS the amount of exemption
which may be claimed.
Q.-An employe receives a per
diem allowance for expenses in ad-
dition to his regular salary. Is this
amount to be included as income in
his return?
/ A.-Yes. The entire amount of
allowance received should be report
ed as income The difference be-
tween the expenses incurred and paid
while away from home and the or
dinary expenses while at home may
be claimed as deduction.
eff ! enter into a contract in
Il 1917 which will not be completed
until 1918 and which requires me to
make expenditures for material and
labor provide for possible losses,
etc., must l include the advance
payments receive in 1917 in my re-
turn for that year?
A.-No. AS you are unable to
! determine what amount of gain or
profit you will derive from the con-
tract until it is completed, the pay
ments received thereon during 1917
need not be included in your return
for that year. When the contract
is completed the net gain or profit
derived therefrom should be report
ed under gross income" in your re-
turn for the year 1918. ".
Q.-John Doe, whole driving an
automobile, ran down and injured
another person He either paid over
q certain sum or paid a judgm ent
rendered against him, in settlement
of the injury done. Can he claim the
amount so paid as loss?
A.-No. 1t was not loss which
was incurred in the conduct of his
business or trade, or which resulted
from a transaction entered into for
| profit.
Q.-I bought a patent for $4,000
| which under the patent laws of the
! United States had five years yet to
run. AS the value of this patent
! depreciates each year on account of
the exhaustion of the patent period,
may deduction be claimed?
A.-Yes. The cost of the patent
| divided by the number of years it
has yet to run, yields an amount
which may be claimed each year as
| depreciation. In your case this
amount is $1,000.
Value of Destroyed Crops
Off a crop which is ready to
be harvested, but has not been gath
cred, or a crop which has been har-
vested but has not been sold, is de-
stroyed by storm, flood or fire, can
the value of that crop be claimed as
deduction?
A.-No. 1t is understood, of
| course that the actual cost of pro-
duction so harvesting a crop which
has been so destroyed may be claim
ed as a deduction under the head of
| business expenses.
Q.-During 1917 I contributed
| 500 toward the support of a needy
! family. May this contribution be
| claimed as a deduction?
A.-Contributions or gifts made to
| individuals do not constitute allow
| able deductions.
off, on account of friendship
OF relationship / advanced a certain
sum to assist needy friend or rela-
tive, and at the time such advance
was made / had little or no reason to
expect that the amount so advanced
would ever/be returned, may 1 now
claim deduction to cover such ad-
! vance?
A.-No, such an advance, partak-
ing, as it does somewhat of the ma
ture of a philanthropic donation or
q goodwill offering, is not held to
constitute bona fide debt.
i "a" claimed that "B" owed
| but agreed to pay $500 in compro-
| pofea Nav HAp cio IN, as a dadpnfion