Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1918-01-10
interssting Points
Conserving Complex
Income Tax La,U

Il am paying my divorced wife more
than her support would naturally cost
me were we living together" writes
one In doubt regarding his income tax
exemption. Because of this alimony
am I to be considered q married man
and therefore receive an exemption OF
$4,000 in figuring my tax?'
Tho experts say that the above In
quirer Is single man and that ali
mony is not exempt.
"Who pays the income tax on the
cash dividend OF a corporation writes
another, "the individual receiving the
dividend or the corporation" The In
quirer cites as an example a salary OF
$1,000 a year with income from divi-
dends OF $4,000. His tax Is figured as
follows:
Two per cent under the new law on
salary over $4,000, or $50.
Two per cent under the old law on
salary over $4,000 or $50.
One per cent sur-tax on total income
in excess of $1,000 or $25.
Total tax SOS.
Insurance Dividends.
Il have seen the claim made" writes
a reader, that the so-called dividends
issued by life insurance companies and
used in part payment OF premiums on
life insurance should be considered as
income within the meaning Of the law.
I think these so-called dividends
should rather be called rebates than
dividends. They are due to the fact
that the insurance companies, when
the amounts they should
charge for insurance, figure up what
they can reasonably expect and then
add n certain amount for margin OF
safety.
Accordingly they charge their policy
holders a little more than they should
and at the end Of the year return the
excess. There Is nothing to indicate
that this. In reality a rebate, Is In any
way an income. The payment Is mere
ly the return OF an over charge. Am
correct?"
The writer Is held to be correct by
the government experts.
Other Questions.
OIL am single and the guardian or
an orphan. not legally adopted, whom
I am rearing and eduating. What ex-
am allowed. A.-S2000.
OIL am travelling salesman with
an expense account. Is 1t exempt or
figured as part OF income? A.-Figured
as income.
o. own 125 shares OF stock in
capitalized at $4,000. In
1917. tho capital stock was
increased to f1O0 900. thus automatical-
~ increasing my number OF shares to
500. No new capital was invested, the
increase being made from the surplus
account by decreasing that account by
s75. 900 Having deprived no income
thru the transaction, am required to
pay income tax on the stock thus &C
qulred? Ayes, for surtax purposes
only.
Date 10 Important.
OFF my salary for December Is
paid to me in January must I include
1t in last years income? A.-No. fig
ure income actually received.
o. am physician and use part
Of the house rent as an office for pros
fess,onal purposes. Can / deduct a part
OF my rent as business expense?
Ayes. a proport!onate deduction
can be claimed.
would like to know when my share Of
tho product is to be taken into con-
sideration. A.--Only in the year when
1t Is converted into cash Of its equiv
alent.
Q.-Must girl pay tax on money
she Is awarded by court in breach
of promise suit? Ayes.
OIL am operating a drug store and
was compelled to pay $500 judgment
due to a clerk making an error in put
ting up a~medicine. May deduct this
as business expense? Ayes.
A Bad Debt Paid.
OIL collected considerable sum
OF money in 1917. which I had charged
O ffmy books several years ago as a
bad debt. Must pay income tax on
this? Ayes.
OFF husband and wife are sepa-
rated, each taking one child. are both
entitled to the $4,000 exemption. A.
Yes.
Q.-1s an individual contractor do
ing work for state. county. or munlc-
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