Daily capital journal. (Salem, Oregon) 1903-1919, 1918-01-15
MORE QUESTIONS
ARE ANSWERED AS
TO INCOME TAXES
Advance Payments, Received
on 1917 Contracts Not
Completed

| More information is given the pros
ipective income tax payer in the follow
ing list Of questions and answers pre-
pared by the collector of interna: teve-
nuc s office. They deal with reports that
must Lc made regarding profits OH un-
completed contracts, from the sale of
property, and various reports called for
1rcm farmers, tenants and in regard to
bonuses raid by corporations. The list
is as follows:
| q. 22-It I enter into contract in
1917 which will not be completed until
1913, Sud whicE requires me to make ex-
pendit ares fCr material and labor, pro-
vide for possible losses, etc., must I in
clude the advance payments receive
in 1917 iii Try return for that year?
A No. As you are unable to deter
mine what amount of gain or profit you
will derive from the contract until it is
completed, the payments, received there
on during 1917 need not be included in
your return fol that year. When the
contract is completed the net gain or
profit derived therefrom should be re-
ported under gross income in your re-
turn rendered for the year 1918.
@. 23-How am able to determine
what amount Of gain or profit derived
from sale Of property is returnable
for income tax purposes?
Aft you acquired the property sold
prior to March l, 1913, you should take
its fair market price OF value as of that
date and add thereto all amounts sub
sequently expended in making perman-
cnt improvements, and the difference
between the total thus obtained and the
selling price of the property is the
amount to be reported under gross in
come.
If you purchased the property on or
after March /, 1913, the difference be-
tween its cost, plus all amounts subse-
quently expended for permanent inn
Iprovements, and its selling price, is to
returned
If the property came to you on or
after March /, 1913, as an inheritance,
the difference between the appraised
value placed upon it at that time plus
all amounts subsequently expended for
permanent improvements, and its sell
ing price, is to be returned.
Q. 24-When is a farmer to return for
tax purposes the value of crops and
bLOCk pIO0uCSUg
A.-The value of grain, stock and
other products produced on farm is not
considered taxable income until reduced
to cash or the equivalent of cash. There
fore, if crops and stock were produced
| in 1917 on farm, owned by you and
they were sold in 1917, the total amount
received therefor is to be included un-
der gross income in your 1917 return.
Crops and stock produced in 1917, and
on hand December 81 of that year, need
not be considered; but the amount re-
ceived therefor should be included i'll
your return rendered for the year during
which they are sold.
O. 25-l rent a farm on shares When
is my share of the CROPS and stock to
be taken into considerations
A.-Only for the year in which sold.
@. 26-ls farmer required to report
the value of the farm produce which is
consumed by himself and family?
A.-No, but any amount of expense
incurred in producing garden truck, or
other products so consumed, cannot be
claimed as a deduction.
@. 27-If farmer exchanges produce
for merchandise, groceries, etc, is the
value of such merchandise to be return
ed for tax purposer?
A.-Yes. The price placed by the mer-
chant upon the goods exchanged for
| farm produce is to be included as income
| in the farmer s return.
&. 2s-A tenant, under the terms of a
lease, is required to pay certain cash
.ental and in addition make certain i'm
prcyements. Is the cost of these i'm
provements held to be taxable income to
the property owner?
A.-Ycs. The cash rental, plus cost OF
imlJr lvements, should be reported under
gross income in the landlords personal
return.
@. 29-Special payments, designated
as Bonuses" are often made to off
GERS and employees or corporations, firms
and individuals. Are such items of in
come subject to tax in the hands OF
their recipients?
A.-Any bonus or other item of com
peneation, paid to an employe in add
tion to his regular salary or wage under
A contract expressed or implied, as ad-
ditional compensation for services rem
dereJ. as a reward for past endeavors,
or as a stimulus to further zeal and en-
thueiasm in the discharge of his duties,
is held to constitute taxable income
which should be reported under gross in
come in the employees IS return rendered
for the year during which received.
Christmas remembrrances, anniversary
gifts, etc, from an employer to an en-
plove do not constitute such items as the
subject to the income tax.