Imperial Valley press., 1919-02-01

clude in his income tax computation
the value of farm produce consumed
by himself and family. But in cases
where he exchanges produce for
merchandise must be included.
"All other items of income arising
during the year through personal
service, business or trade, through
use of property or money, should be
added into the gains for 1918.
Everybody wants to know what
income is exempt from tax Very
few plums that fall to the average
man may be legally disregarded in
figuring up his 1913 income. Gifts
and bequests can be eliminated; also
proceeds of life insurance received
by the beneficiary of an insured per-
son. A person who cashed in an en-
dowment policy need report as in
come only that portion which ex-
ceeds the total of the premiums he
paid in all years on that policy. An
nuities are not taxable, unless the
person received in the year payments
which represent, when added to all
prior payments on the annuity, an
amount greater than the original
cost of the annuity. Dividends on
unexpired life insurance policies are
not taxable income; but dividends on
paidup policies must be considered
income. Alimony is not income to
the recipient, nor is it an allowable
deduction on the part of the person
who pays.
"From the total Of all items of in
come there are certain deductions al
lowable by law All interest paid on
personal Indebtedness and all taxes
paid during the year are deductible,
except federal income and excess
profits taxes, inheritance taxes and
assessments for local improvements
such as sidewalks, sewers, etc. Losses
incurred in business or trade are al
lowable, also losses arising from
fires, storms, shipwreck or other cas-
uality, or from theft, in cases where
such losses are not compensated for
by. insurance or otherwise. Losses in
Cured outside of a persons regular
business are allowable to the extent
of gains reported from similar trans
actions within the year. Debts due
to the taxpayer actually ascertained
to be worthless during the year are
deductible.
depreciation on property used in
a profession, in business, or in farm
ing is another item that may be
claimed as a deduction. The store
keeper may claim depreciation on III:
fixtures, and on his delivery horse:
h,,% hIc CtnPI
held for sale. The professional maj
may claim similar deductions on hi
Instruments; and, in the case of
physician who maintains team OF
auto for making his calls on patients
reasonable depreciation may b.
claimed.
"The farmer may claim deprecia
ton on his farm buildings, aside from
his personal residence, also on hi
farm machinery, his work horses
and farm work wagons. The theor!
of depreciation, in connection will
the income tax. is that wear and teal
caused by use in earning income is 8
real expense in the earning of that
income. The rate is determined by
the number of years that the prop
erty ordinarily would be useful, and
the cost of the property is the basis
of the computation. If the property
suffered depreciation was bought or
acquired to March 1, 1913, the mar
ket values of that date are used, in
stead of the cost, in figuring depre-
citation.
contributions of gifts actually
made in 1918 to organizations operat-
ing exclusively for religious, charit-
able, scientific or educational pur-
poses, and to societies for the pre-
vention of cruelty to children or ami
mails, may be deducted, to the amount
not exceeding fifteen per cent OF the
net income computed without the
benefit of this deduction.
"After the total of all income is
found, and the deductions allowable
bv law have been computed as an off
set, the amount of income in excess
of such deductions is the net income.
which forms the basis of the assess
ment Of tax.
"If every person in this district
will examine his own 1918 income and
his allowable deductions, in line with
OdCd CndC ~ nave given, HC W.. hH,'"
beyond doubt whether he must file
his return when the blanks arrive.
And here is how he will determine his
liability to file a return. Il he is
single he must file if his net income
was 81 900 or more, and this teq lire
ment is enforced whether or not he
is the head of family. If he is mar
ried, he must file his. return if his
net income, including that of his wife
and minor children, was $2o or
more.
81 want to emphasize the co-pera-
ton of the collection of the income
tax this year. The policy of the in.
ternal revenue bureau is to aid
taxpayers to meet the requirements
of the law. We are going right to
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