The Canon City record with which is consolidated the Canon City cannon., 1919-01-30
REVENUE COLLECTOR SKINNER
SAYS GET BUSY 0NYDUR
income TAX OBI CATION

cnanoise mubt nnd nlb prOutS lot tne
year on the following basis: First.
ascertain fhe gross sales OF total cash
receipts. Then add together the in
veEtory at the beginning of the year
and the purchase of goods for resale.
From this litter sum subtract the In
ventory OF goods on hand AT the years
end, and the result Is the cost of the
goods sold. This cost. plus necessary
expenses incurred solely through con-
duct OF the business, is 10 be deduct
ed from the gross sales, and the result
is the net earrings of the business.
"A personal man arrives at his pro-
fessional income by ascertaining the
total of fees for services and deduct
ing therefrom all expenses connected
directly and solely with his practice.
"A farmer must figure mp all income
derived from the sale Or exchange Of
products during the year, whether
such produce was raised on the farm
or purchased and Fesold. He is al
lowed TO deduct from this total his ex-
penses of the year connected with the
planting. cultivation. harvesting and
marketing OF she crop. or The care.
feeding and marketing of live stock.
He is not allowed to deduct the
amount expended in 1918 IN purchas-
ing stock for resale. but when Ench
stock is sold its cost is TO be deduct
ed from sale price in ascertaining the
gain to be incfuded IN his return OF
income. The cost price of stock
bought prior to 1917 cannot be de-
Quoted 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 Blu, in cases
where he exchanges produce for mer.
chandise, groceries. cir. tie market
value of the articles received in ex-
change must be included.
''All other items of income arising
during the year through personal serv-
ice. business or trade. through use
Of property or money. should be added
into the gains OF 1915.
Everybody wants TO know what in
come is exempt from tax Very few
piums that fall to the average man
may be legally disregaried IN figuring
up bis 1918 income. Gifts and be
quests can be eliminated, also pro-
ceeds of life insurance received by tine
beneficiary of an injured person. A
person who casbed in an endowment
policy Ieed report as income only
that portion which exceeds the total
OF the premiums he paid in all years
- kue a-v
taxable unless the person received in
the year payments which represent.
when added 10 all prior payments on
the annuity, an amount greater than
the original cost OF the annuity. Divi.
dends on unexpired life Insurance pol
icies are not taxable income; but divi-
dends on paid-up policies must be
considered income. Alimony is not
income TO the recipient. nor Is Il an al
1owabie deduction 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 deductibie.
except Federal income and excess
prof,t taSes, inheritance taxes and
assessments for local improvements.
such as sidewalks, sewers. etc. Losses
incurred in business or trade are al.
lownbie also losses arising from fires.
storms. shipwreck or other casualty.
or from theft, IN cases where such
LOSSES are not compensated for by in
surance or otherwise. Losses incurred
outside Of persons regular business
are allowable to the extent of gains
reported from similar transactions
within the year. Debts due to the tax
payer actually ascertained to be
worthless during the year are de-
Quoted
depreciation ON property used IN
a profession, in business. or in farm
ing is another item that may be
claimed ms deduction. The store
keeper may claim depreciation on his
fixtures. and on his delivery horses
and wagon. but not on his stock held
for sale. The professional man may
claim similar deduction on his instru-
ments. and. in the case of a physician
VINO maintains a team or auto for
making calls on patients. reasonable
depreciation may be 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 CT depre-
citation. in connection with the In
come tax, is that wear and tear caused
by use IN earning income is real eS-
pense in thu earning of that income.