The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1919-01-23

gross figures, a!th0 the law does not ,
impose the normal tax on distribu-
tions made by domestic corporations. /
person buying and selling mer-
chandise must find his profits for the |
year on the following basis: First,
ascertain the gross sales or total cash /
receipts. Then add together the in
ventory at the beginning of the year !
and the purchases for resale. From |,
this latter sum substract the inven-
tory of goods on hand at the years |
end, and the result is the cost of
goods sold This cost, plus necessary
expenses incurred solely through con-
duct of the business, is to be de-
Quoted from the gross sales, and the
result is the net earnings of the
business.
\ professional man arrives at his
Professional income by ascertaining
the total of fees for services and de-
ducting therefrom ali 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
I the amount expended in 1918 in pur-
chasing stock for resale; but when
such stock is sold its cost is to be de-
Quoted from the 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, if
such cost was included in the de-
duction made in the year of pur-
chase.
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 exchanged 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
added 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 disregarded in figuring
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
e not taxable, unless a person received
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 taxable income; but
, dividends on paid up policies mus,
be considered income. Alimony Is
| not income to the recipient, nor is il
r an allowable deduction on the part OF
the person who pays.
a From the total of all items of in
' come, there are certain deductions
v allowable by law All interest pait
4 on personal Indebtedness and al
Q taxes paid during the year are de
D ductible, except Federal Income ant
s Excess Profits taxes, inheritance
z taxes and assessments for local i'm
A provements, such as sidewalks, sew
r ers, etc. Losses incurred in business
0 or trade are allowable. also losse
/, arising from fires, storms, shipwrecl
$ or other casualty, or from theft, II
!. cases where such losses are not com
S pensated for by insurance or other
!. wise. Losses incurred outside OF
l. persons regular business are allow
j. able to the extent of gains reported
/. from similar transactions within tn
n year. Debts due to the taxpaye
I, actually ascertained to be WORTHLESS
h during the year are deductible.
Depreciation on property used in
: profession, in business or in farmin
is another item that may be elaine
4 as deduction. The storekeeper ma
q claim depreciation on his fixtures an
II on his delivery horses and wagons
"a but not on his stock held for salt
10 The professional man may clail
a. similar deduction on his instruments
o and, in the case of a physician VIII
N maintains team or auto for maxim
"a calls on patients, reasonable deprecit
+. tion may be claimed. The farme
n may claim depreciation on his farl
buildings, aside from his person'
ar residence, also on his farm machil
IL cry, his work horses and farm wor
II wagons. The theory of depreciation
r. in connection with the Income Ia
at is that wear and tear caused by us
m in earning income is real expens
Ia in the earning of the income. I'll