New-York tribune., 1919-02-17
Norris Z. Frey

MOTIFS L. Frey.
az "a, C,tons"ItGnt Of that institution 49,,
u eeoot"9 aufhorlty on the subjsct 'n', unG
uHSWer az questions. Yoy s,1'' ys'.' Vis
J0re' tel Your tar troubles % ~ers r
f19"Re aclth the assurance tbne ~ y me
'o"S fecc1cc erpert considerot;o,, v,'ey
qn9St{ons chlch are OF general .. noss
'"t 0c dnswercd iR tiis co},,.e s''e'ss'
onfy aa1tldls aciN be usod 'am@ tn oat
questions l0W be onslcoye6 h., .s .,''. 0'Aer
G,onlnunacofionS 4cuI be ,coo'.,Se; y',i"; Al
h1qhiy confidential. @""oa as
on loiH fGUor as and c,n.1;..
rePlg a yo~ sclN please obserrs eyr1,'9 IN ,e'
STATE your questions as conc;so,u
possible, but be sure that no 'esssIy esS...,s as
information is withheld N'Se"'lal
Write on one side of paper on,v
for reply. >'''u envelope
;14ddress all correspondence 10
lax Service Department 1r;h.
Susiness News Bureau, 15i Ny,Ssne N.sS0r
street. New York City. '''''Su
Question: I have received small
lot ilo.,t or Liberty bonds as d;y;JoSa G,aa.'
Nhould they be returned as incomoq rpo''u
answer; Dividends paid in Iibor,r
ponds are taxable income to SAL stSoi
holders receiving them and shonld h.
reported at their cash value at tho
'ime OF receipt by the stockhoIder
Question: We are not familiar with
the terms on which the United States
certificates of Indebtedness are e t.
sued and would like to know 70 vbs,
extent the 4 Y per cent interest maid
on these certificates is affected bv the
income tax law.
Answer: Interest on United States
ccrtlhcates of Indebtedness issued
subsequent TO September /. 1917 i
SUBJECT to the individual income sur.
taxes and 10 the war profits and ex.
cess profits taxes. Such interest is no!
subject to the normal income fax ON
individuals, nor the income tax on cor
porations. Under the law. interest on
an amount of principal of such Ger.
tlflcates in the aggregate of $1,000 is
exempt from all taxes. The principal
OF such certificates is subject to estate
taxes.
Question: Ny wife died on July 15
1918; VIII 7 be entitled to per
sonal exemption Of $4,000?
Answer: The status of an individ-
nal for the purpose of the personal
exemption under the Federal income
tax law is the status as of the dale
OF the end of the taxable wear for
which return is made If, therefore.
4 man is single on December 81, 1915
although he was married during the
year and his wife died prior to the
end of the year, his return shall be
made on the basis of single person,
or the head of family, as the case
may be. If he is the head Of family
his personal exemption is $1,000, other
wise $1,000.
Question: Many corporations. act
ing upon the advice of bankers or &C.
countants, set up on their books on
December 81. 1914 reserves for est
mated or actual amount OF taxes 10 be
paid IN June, 1918. When making ou.
the return for urdistributed net in
come, however, the income was more
than taken care Of b. other charge
and they therefore considered the
taxes paid in June. 1918. as coming out
of 1913 income. n spite OF the tsoi
that the reserve had already been SCI
up on the books
VIII the fact that they set ND sucn
reserve be interpreted by tna
Treasury Department as making an
difference in their invested capital 10,
the year 1918. if on their undistribuiea
income tax returns they did not sho"
these taxes as coming out OF the year
1917. but planned to consider them a.
paid out Of the income Tor 1918.
Answer: If the taxes we're paid IN
1918 from earnings Of 1918. the fact
that an unused reserve of 1917 earn
ings was set up during 1917 VIII no.
he considered as denying the corpora
ton the privilege of including suoa
reserve in its invested capita as OF
January l. 1915, provided that on II.
undistributed profits return, II dio ~.
show taxes as ccmirg cut Of the yer
1917, buf planned to consider them as
paid out of the income OF 1918.
Question: Our business uo -
September ] last year was q copa'..
nership. Are the undivided ea.nhss
of 1917 subject TO an excess prom
tax and when distributed subject 70 .
normal tax and surtaH Kin
Answer: Earnings of partnersnp
during the wear 1917 were supJec'
excess profits tax under the az.
october =, JHl!. ana edCu iiiu.i
partner was liable both for the noriis' nIi1..
tax and the surtax on his distriDuln'
interest in such profits, whether o'
tributed or not
Question: ! have total income y.
S25.000. part of which income c..
sists of dividends from S2o,Qve o. ar5 ~;
second and third Liberty Loan, 90 80
$4,000 original subscrlntion o. m
fourth Liberty Loan. What hcom
tax If any IS there levied or 1asT ~.
$4,000 Liberty bonds. or are trey
tirelv free from all tax. the same
the first Liberty Loan bonds! ..o,t,
Answer: Your $4,000 Lloe.r a,o
bonds of the fourth issue are eAefss ef,sr
from income tax until two years a,., ,or
the termination of the war. AS '
are an original subscriber TO 6ohGs 1G;,c
the fourth issue, your total nolui, srs
of the second and third issues N
exempt for the same perloo.
amount of $4,000 of your holdings !sr,. -
the second. third and fourth 18th shs
Iursr~ tho lie Ol -