The Richmond Virginian. (Richmond, Va.) 1910-1920, 1919-01-23


is allowed to deduct from this total
his expenses of the year connected
with the planting. cultivation, har-
or the care, feeding and marketfna
OF uye stock He. IS mt allowed e
! tactnhr TrSe, ,Tysrsa 4 & ae snAn In hsS
In Purchasing stock for resale; but
when such stock is sold its cost is to
be deducted from sale price in ascer-
tanning 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. II
such cost was included in the deduc-
ton made in the year OF purchase.
The farmer is not required to in
clude 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 Uarke>
value OF the articles received in ex
change must be included.
"An other items of income arising
during the year through personal
service, business or trade. through use
of property or money. should be
added into tho gains for 1918.
Everybody wants to know what
| income Is exempt from tax. Very Few
rlums that fall to the average man
! may be legally disrecarded in figuring
up his 1918 income Gifts and be-
quests can he eliminated: also pro
ceeds Of life insurance received by
he 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 pedson 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 and unexpircd
! life insurance policies are not tax
able income: hut dividends on paid
UP policies must he considered in
come. Alimony is not income to the
recipient. nor Is it an allowable de-
duction on the part of the person
who pays.
Prom the total OF all items OF in
come. there are certain deductions al
lowahle by law. All interest paid on
personal Indebtedness and all taxes
paid during the year are dednctible,
except Federal income and excess
profits taxes, inheritance taxes and
assessments for local i'm provements.
such aa sideW alks, sewers. etc. Losses
incurred in business or trade are al
Iowa bic, also losses arising from fires.
storms shipwreek. or other casualty.
or from theft. in cases where such
losses are not compensated for by in
surance or otherwise. Losses in
Cured outside of q 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
deauctible.
! depreciation on property used in
a profession. in business, or in farm
ing is another item That may he
claimed as Il 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
physician who maintains "A team or
auto for making his calls on patients,
I depreciation may he claimed. The
farmer may claim depreciation on his
farm buildings, aside from his per-
sonal residence, also on his farm ma
chinery, his work horses and farm
work wagons. The theory OF depre-
citation. in connection with the income
tax. Is that wear and tear caused by
use in earning income Is a real eX-
The rate is determined by the num-
Der of years that the properly or
dinarily would he useful, and the
cost OF the property If the basis or
, the com putation, II the property
suffering depreciation was bought or
, acquired prior to March !, 10 3. the
market value as of that day is used,
instead OF the cost. in figuring depre-
citation.
contributions or gifts actually
made in 1918 to organizations oper-
atinf exclusively for religious charit-
able. scientific or education purposes,
and TO societies for the prevention OF
cruelty to children or animals. may
be deducted, To an amount not ex-
ceeding ) 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
by law have been computed as an
OFFSET, the amount Of income In ex-
cess OF such deductions is the net in
come, which forms the basis OF the
assessment OF tax.
IF every person in this district
will examine his own 1915 income
and his allovab deductions in line
with date shat I have given, he will
know beyond doubt whether he must
file his return when the blanks ar
ri.e. And here is how he will de-
tcrmine his liability to file a return.
II he Is single he must file II his net
income was 900 or more. and this
requirement is enforced whether or
not he Is the head of a family If he
is married. he must file his return it
his net income; including that of his
wife and minor children was $4,000
or more,
II want to emphasize the co-opera.
ton feature OF the collection OF the
income tax this year. he policy OF
the Internal Revenue Bureau is to aid
taxpayers to meet the requirements OF
the law We are going right to the
neople not to swing clubs or to mulct
the wage Garner of his savings. but
offering every helpful governmental
function that will assist people to do
their duty