New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1919-01-21

MS expenses OF the year connected
with the planting, cultivation harvest
ing and marketing of the crop, or the
care, feeding and marketing of live
stock. Hc is not allowed to deduct the
amount expended in 1918 in purchas-
Ing stock for resale; but when such
stock is sold it's cost is to be deducted
from sale price in ascertaining the
gain to be included in his return of
income, The cost price of stock
bought prior to 1917 cannot be de-
Quoted as in the case just cited, If
such cost was included in the deduc-
ton made in the year of purchase.
The farmer is not required to in
c]ude in his income tax computation
the value of farm produce consumed
by himself and family. But in cases
where he exchanges produce for mer-
chandise, groceries, etc, the market
value of the articles received in ex-
change 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 gain for 1918.
Everybody wants to know what in
come is exempt from tax. Very few
plums that fall to the average man
up his 1918 income. Gifts and be-
quests can be eliminated; also pro-
ceeds of life insurance received by
the beneficiary of an insured person.
A person who cashed in an endow-
ment policy need report as income
only that portion which exceeds the
total of the premiums he paid in
all years on that policy. Annuities
are not taxable, unless the person re-
ceived 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 taxa BILE in
come: but dividends on paid-up
policies must be considered income.
Aim ony 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
1owab1e, also losses arising from fires,
storms, shipwreck or other casualty,
or from theft, in cases where such
losses are not compensated for by in
urance or otherwise. Losses in
CURED outside of a persons regular
business are allowable to the extent
Of gains reported from similar tran
sactions within the year. Debts due
to the taxpayer actually ascertained
to be worthless during the year are
deductible
Depreciation Is Allowed.
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 his !
fixtures and on his delivery horses !
and wagons, but not on his stock held |
for sale. The professional man may |
claim similar deduction on his in
struments; and, in the case of ply |
stefan who maintains a team or auto |
for making making his calls on pa !
tients, reasonable depreciation may |
be claimed. The farmer may claim !
depreciation on his farm buildings,
aside from his personal residence, also
on his farm machinery, his work
horses and farm work wagons. The
theory Of depreciation, in connection !
with the Income Tax, is that wear and
tear caused by use in earning income
is a real expense in the earning of ,
that income. The rate Is determin ed |
by the number of years that the pro
perty ordinarily would be useful, and
the cost of the property Is the basis
of the computation. IF the property
suffering depreciation was bought or
To he |
market value as to that date is used,
instead of the cost, in figuring de-
probation.
contributions or gifts actually
made in 1918 to organizations operat-
ing exclusively for religious, charitable
scientific or EDUCATION purposes, and
to societis for the prevention of
cruelty to children or animals, may
be deducted, to an amount not ex-
ceeding Is per cent. of the net income
committed within the benefit of this
deduction.
after the total oil all income is
found, and the deductions allowable
nv law have been computed as an off
set. the amount of income In excess
or such deductions Is the net income,
which forms the basis OF the ASSESS
ment Of tax.
IT want to emphasize the coopeTa-
tive feature of the collection Of the In
come Tax this year. The policy of the
Internal Revenue Bureau is to aid
to meet the requirements
~ the law. We are going right to the
neonIe not to swing clubs or to mulct
+be waee-e Garner OF mis- savings, but
offar,ng every helpful governmental
r,,cttnr that will assist people to do
their duty"