The Little River news., 1919-01-25
not impose the normal tax on dis
 Itributions made by domestic corpora

tions
 "A person buying and selling mer chandise must find his profits fol the year on the following basis: First 7 ascertain the gross sales or total casl receipts, then add together the inven tory at the beginning of the year ant the purchases of goods for resale From this latter sum subtract the in 'ventory of goods on hand at the years end, and the result is the cost of goods sold. This cost, plus necessary ex penses incurred solely through con duct of the business. is % be deducted from the gross sales, and the result is the net earnings of the business. 1 "A professional man arrives at his professional income by ascertainine the total of fees for services and de ducting therefrom all expenses con- nected directly and solely with his practice.
 "A farmer must figure up all income derived from the sale or exchange of products during the year, whether such produce was raised on the farm or purchased and resold. He is al- lowed to deduct from this total his expenses of the year connected with the planting, cultivation, harvesting and marketing of the crop, or the care, feeding and marketing of live stock He is not allowed to deduct the amount expended in 1918 in pur- chasing stock for resale; but when such stock is sold it's cost is to be de- ducted from sale price in ascertain ing the gain to be included in his re- turn of income. The cost price of stock bought prior to 1917 cannot be deducted as in the case just cited, if such cost was included in the deduc- tion 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 market value of the articles received in ex- change must be included.
 All other items of income arising during the year through personal ser vice, business or trade, through use of property or money, should be add ed into the gains for 1918.
 Everybody wants to know what in- come is exempt from tax. Very few plums that fall to the average man may be legally discharged in figur- ing up his 1918 income. Gifts and bequests can be eliminated; also pro- ceeds of life insurance received by the beneficiary of an insured person. A person who cashed in an endowment 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, un- less the person received in the year payments which represent, when add ed to all prior payments on the annui- ty, an amount greater than the origin al cost of the annuity Dividends on unexpired life insurance policies are not taxable income; but dividends on paid-up policies must be considered income. Alimony is no, income to the recipient, nor is it an allowable de- duction 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 ant assessments for local improvements such as sidewalks, sewers, etc. Losse: incurred in business or trade are al lowable, also losses arising from fires storms, shipwreck or other casualty Tor from theft, in cases where sucl losses are not compensated for b! insurance or otherwise. Losses in cured outside of a persons regula business are allowable to the extent 0 gains report od from similar transac tions within the year. Debts due t, the taxpayer actually ascertained t, be worthless during the year are de ductible.
 | "Deprecia lion on property used in
 profession, in business, or in farming
 is another item that may be claime as deduction. The storekeeper ma, lclaim depreciation on his fixtures, an,
 on his delivery horses and wagons
 but not on his stock held for sale Tn
 professional man may claim simila deduction on his instruments; and, il the case of physician who maintain a team or auto for making his call on patients, reasonable depreciation may be claimed. The farmer ma n1oiy,o donroo;ofiD~& Ls~ L..sy ]