The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1918-02-08
THE Abe OF THE INCOME TAX
Fifth Lesson

Suppose the company I work for is
hard up and does not pay me all of my
salary for 1917?
A. You are not required to pay on
anything you do not receive.
That's fair enough How about a
farmer? When does he pay on his stock
and crops?
A When he sells them.
If a farmer exchanges butter and eggs
for merchandise?
A. Figure the trade on a cash basis.
It is income to the farmer. and any
profit made by the merchant is income
to him.
How about the garden truck that
farmer raises and consumes?
A. He is allowed no deduction on that.
One of my neighbors rents a farm on
shares. When are the shares of the
owner and the renter to be considered?
A. For the year in which crops are
sold.
How about bonuses?
A. They are held to be part of your
regular income, but Christmas gifts, etc,
from an employer to an employe are
not subject to tax.
How should a business man engaged
in merchandising determine his profits for
the year 1917?
A. A merchant should take stock in
ventories annually. He must do it to
ind riIf xxb ha CT w will
suppose that this merchant we are talk
ing about had taken inventory at the
close of business December 81, 1916. To
this he adds the cost of all merchandise
purchased in 1917 which will give him the
total value of his stock Now he takes
his inventory at the close of 1917 and
the difference between the value Of his
stock on hand, plus his purchases de-
Quoted from his gross receipts win show
his gross income, and allowable deduc-
tons taken from this show net income.
How does the government treat ma
tured endowment life insurance?
A. You make returns on the differ
ence between the total amount paid by
you in premiums and the amount you re-
ceived on maturity of policy
Bill Jones received $1,000 last year from
1
breaking his leg. I guess that isn't in
come?
A Oh yes, it is, and the ruling also
prevails to the amount of any money
their taxes would be. They began in
September to figure on the increases
In their tax accounts and these jumped
from $17,000,000 in August to an av
erage of s23,000,000 In each of the
later months.
Other comparisons by months show
that beginning in May freight re-
ceipts increased rapidly, as the gov
ernment was building environments and
stimulating big war industries. AL
though the government was given
rates averaging 40 per cent lower than
rates to private shippers, this traffic
proved profitable because it was in
large quantities. Freight revenues
reached the peak in October, amount
ing then to s270,00o,0o0. and have de-
clined rapidly since. December freight
revenues were estimated at not more
than s20o,00o.00o, the reduction being
caused by bad weather and embar-
goes.
OPERATING EXPENSES
Total railway operating expenses in
creased every month since last Febru-
airy, when it was $207,SSS3,000, to
s26O,000,000 in November and Decem-
ber's figure is estimated at even more.
|esesAn analysis Of Interstate cornmerce
commission figures by districts shows
that although eastern roads received
sl662.o00,000 operating revenues in the
II months ending with November as
compared with $1,49o, 900 revenues on
western lines. the net income was
less. 1t was in the east that the
greatest congestion and the derange-
ment from embargoes were felt in the
last months of the year.
Railway operating income of the
eastern lines was estimated at $373.-
$4,000 for the year; western lines
SaaS,ols,0O0, and southern lines, $751;
$4,000. Earnings per mile were s5963
Tor the east, $3177 for the west and
$S363 for the south.
None of these figures include the
cost OF buying new equipment which
IS reported under separate capital ac-
counts. Thousands of additional loco
motives, coal cars and other rolling
stock We're bought in 1917.