The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1919-01-20
INCOME TAX
CONTINUED From Page One.]

is allowed to deduct from this total
his expenses of the year connected
with the planting, cultivation, harvest
ing and marketing of the crop, or care,
feeding and marketing Of live stock.
He Is not allowed to deduct the
amount expended in 1913 in purchas-
ing stock for resale; but when such
stock is sold its cost is to be deduct
ed from sale price in ascertaining the
gain to be included In his return of
income. The cost price OF stock
bought prior TO 1917 cannot be deduct
cd as in the case just cited, If such
cost was included in the deduction
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 him self 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
What is Exempt.
All other items Of income arts ing
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 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 endowment
policy need report as income only that
portion which exceeds the total Of the
premiums he paid in all years on that
policy. Annuties are not taxable, I'M
less the person received in the year
payments which represented, when
added to all prior payments on the
annuity, an amount greater than the
original cost of the annuity. Divi-
dends on unexpired life insurance poll
cies are not taxable income; but divi-
dends on paid-up policies must be con-
siderer income Alimony is not in
come to the recipient, nor is it an al
lowable deduction on the part of the
person who pays.
Allowable Deductions.
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, eX-
cept Federal Income and Excess Pro
fits taxes, inheritance taxes and as
sessments for local improvements,
such as sidewalks, sewers. etc. Losses
incurred in business or trade are al
lowable, also losses arising from fires,
storms, shipwreck or other casualty, or
from theft, in cases where such losses
are not compensated for by insurance
h. \ 4 =.
of a persons regular business are
allowable to the extent of gains re-
ported from similar transactions with
in the year. Debts due to the tax
payer actually ascertained to be worth
less during the year are deductible.
depreciation on property used in
a profession, in business or in farm
ing Is another item that may be claim
cd as a deduction. The storekeeper
may claim depreciation on his fixtures
and on his delivery horses and wagons,
but not on his stock held for sale
The professional man may claim SINH
lar deduction on his instruments; and,
in the case of a physician who main
tains team or auto for making his
calls on patients, reasonable deprecia-
ton may be claimed The farmer may
claim depreciation on his farm build
ings, aside from his personal resi-
dence. also on his farm machinery.
his work horses and farm work
wagons.
The theory Of depreciation, in con-
nection with the income tax, is that
wear and tear caused by use in earn
ing income is real expense in the
earning of that income. The rate is
determined by the number of years