The Arvada enterprise., 1919-01-23

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municipal county or state bonds. In
terest on United States Bonds need
not be included by the ordinary bond
holder who purchased small amounts.
Holders OF large amounts of Liber
ty bonds however, should ask their
bankers to write to my office for the
rule applying to tax on such interest
Dividends on stock shares are
income. and must be included in tho
grosi figures, although the law does
not impose the normal tax on dis
tributions nude by domestic corpor-
ations.
"a person buying and selling mer-
chandise must find his profits for
the year on the following basis; First
ascertain the gross sales or total
casN receipts. Then add together The
inventory ut the beginning of the
year and the purchases of good.. fur
resale. From this latter sum subtract
the inventory of goods on hand at
the yenr's end, and the result is the
cost of goods sold. This cost, plus
necessary cxpcnGA incurred kolely
through conduct Of the business is
to be deducted from the gross snles,
and the result is net earnings of the
business.
"a personal man arrives at his
professional income by nscertaining
teh total of fees for services and
deducting thcrcfrom all expenses
connected directly and solely with
his practice.
"Afarmcr must figure up all in
come derived from the sale or cx-
change of products during the year.
whether such products WAS raised on
the farm or purchased and rcsold.
He is allowed to deduct from this
total his expenses Of the year con-
nected with the planting, cultivation.
harvesting and marketing Of The
corps. or the care, feeding and mar
keting live stock. He IL not allowed
to deduct the amount cxpcn.ed in
1918 in purchaing stock for resale
but when such stock is sold its cost
is to he deducted from sale price in
nsccrtaining the gain to be included
in his return of income. The cost
price of stock bought prior to 1917
cannot be deducted As In the case
Just cited, if such waa included in the
deduction made In the yenr Of pur-
chase.
"Thcfarmer Is not required to in
ciude In his income tax computation
the value Of farm produce consumed
by himself and family, but in cases
where he exchanges produce for mcr.
chnndisc, groceries, ETC., the market
value OF the articles received in cx-
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 gains for 1918.
Everybody wants to know what
income is exempt from tax. Very
few plums that full TO the cverage
Innn 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 nm insured
person. A person who cashed in nm
endowment policy need report as in
come only that portion which cx-
cccds the total Of thtc premiums he
paid in all years on that policy. An
nuitics are not taxable unless the
person the person received in the
year payments which represent, when
added To nll prior payments on tho
annuity, an amount greater thnn the
original cost Of the annuity. Divi-
dends on uncxpired life insurance
policies arc not taxable income; but
dividends on pnid-up policies must
be considered income. Alimony Is not
income to the recipient, nor Is 1t "n
allowable deduction on the part Of
the person who pays.
''t'rom the total Of all items Of in
come, there nrc certain deductions
allowable by Inv. All interest paid
on personal indebtedness and NIL
taxes paid during the ycnr arc de-
ductiblc. except Federal Income and
Excess Profits taxes, inheritance tax
en- and assessments for local improve
mcnts. such M sidewalks. sewers.
etc. Losses incurred In business or
trade nre allowable, also losses aris-
inR from fires. storms, shipwreck or
other cnsualry, or from theft, In
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