Orleans County monitor. [volume] (Barton, Vt.) 1872-1953, 1919-01-22
YOUR INCOME TAX.
Continued from Page One).


gross figures, although the law does
not impose the normal tax on dis
tributions made by domestic corpora
tons.
"A 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 of goods for re-
sale. From this latter sum subtract
the inventory 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 conduct of the business, is to
be deducted from the gross sales, and
the result is the net earnings of the
business.
"A professional man arrives at his
professional income by ascertaining
the total of fees for services and de-
Quoting therefrom all expenses con-
nected directly and solely with his
practice.
"a farmer must figure up all in
come derived from the sale or ex-
change of products during the year,
whether such produce was raised on
u.
is allowed to deduct from this total
his expenses of the year connected
with the planting, cultivation, har-
vestlng and marketing of the crop, or
the care, feeding and marketing of
live stock. He is not allowed to de-
duct the amount expended in 1918 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, if
such cost was included in the deduc-
ton made in the year of purchase.
The farmer is not required to in
cIude In his income tax computation
the value of farm produce consumed
by himself and family But in cases
where he exchanges produce for mer-
chandlse, groceries, etc, the market
value of the articles received in ex-
change must be included
'Al 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
income 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 requests can be eliminated; al
so proceeds of life insurance received
by the beneficiary of an insured per-
SON A person who cashed in an en-
dowment 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 person re-
celved IN the year payments which
represent when added to all prior pay
ments, an amount greater than the
original cost of the annuity. Divi-
bends on uneXpired life insurance mol
icles are not TAXABLE income; but div
ldends on paid-G0 policies must he
considered inco- =. Alincoay is NOT
income TO the recipient, nor is it an
allowable deduction on the part of the
person who pays.
From the total of all items of in
come, there are certain deductions al
IowabIe by law. All interest paid
on personal Indebtedness and all tax
es PAID during the year are deductible
except federal income and excess
profits taxes, inheritance taxes. and
assessments for local improvements.
such as sidewalks, sewers, etc. Loss.
es incurred in business or trade are
allowable, also losses arising from
fires, storms, shipwreck or other cas-
ualty, or from theft, in cases where
suen losses are not compensated by
insurance or otherwise. Losses in
Cured outside of a 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
deductible
Depreciation on property used in
a profession, in business, or in farm
ing is another item that NAV be
claimed as a deduction. The store
keeper may claim depreciation on his
fixtures, and on his delivery horse
and wagons. but not on his stock held
for sale. The professional man NAV
Claim similar deduction on his instru-
ments, and in the case Of a physician