The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1919-01-20

for annualcWea aud tear Of tho rent
ed property. The balance is includ
ed in gross income for the year
Interests on Deposits.
Interest on bank deposits, wheth
or withdrawn or added to his bank
balances, must be included in all cal
culations OF income. Bond interest re-
ceived during the year must also be
included. except interest on munich.
pal, county or, state bonds. Interest
on United States bonds need not be in
Guided by the. ordinary bond holder
who purchased in small amounts
Holders Of large amounts OF Liberty
bonds, however, should ask their
bankers to write to my office for the
rule applying to tax on such interest,
Dividends on stock shares are IN
come, and must be included III the
gross figures, although the law does
not impose the normal tax on distri.
buttons made by domestice corpora
tons. ~
"A person buying and selling mer.
chandise must find his profits for the
year on the following basis; First. as
certain the gross sales or total cash
| receipts. Then add together the in
yentory at the beginning Of the year
and 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 gods
sold. This cost, plus necessary eX;
penses incurred solely through con-
duct of the business. is to be deducted
from the gross sales. and, the result
is the net earnings of the business.
A profess ional man arrives at his
professional incom by ascertalnlns
the total Of fees for services and de-
Quoting therefrom ar expenses con
nected directly and solely, with his
practice.
Figure Income.
"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
the farm or purchased and resold He
is allowed to deduct from this tota!
his EXPENSES Of the year connected
with the planting, cultivation, har'
vesting and marketing Of the crop, or
the care, feeding and marketing OF
livestock. He is not allowed to deduct
the amount expended in 1918 In pur'
chasing stock for resale; but When
s,1ch stock is sold it's cost is to be
deducted from sale price in ascertain
ing the gain to be included IN MS re.
turn of income The cost price OK
stock bought prior to 1917 cannot De
deducted 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. But in cases
where he exchanges produce for mer-
chandise. groceries, etc, tho market
value of the articles received In cx'
change must be included. n
"All other items of income arising
during the year through personal SER
service, business or trade, through use
of property or money, should 'be add
ed into tho gains for 1918. ~. &
What Is Exempt. =,
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; also
proceeds Of lie insurance received
by the beneficiary of an insured per-
son. A person who cashed in All en-
dowment policy need report. as In
come only, that. portion which exceeds
the total ofNtiIe premiums,'he paid III
all years OH that policy. Annutles
arc not taxable, unless the person re-
ccived 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 unexplred lie
isurance policies ar not taxable in
come; but dividends on paid up poll
cies must be considered income. Ali
many is not income to the recipient,
nor is it an allowable deduction on
the part of the person who pays.
"E'rom the total Of all items OF Ill
| come, there are certain deductions
allowable by law. All interest paid on
personal Indebtedness and all taxes
paid during the year are dedutibel, ex-
cept federal income and. excess prot
it's taxes, inheritance taxes and as
! sesslnents 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
such losses are not compensated fol-
by insurance or otherwise. Losses
incurred outside of PERSONS regular
business are allowable to the extent
of gains reported from. similar trans
actions within the year. Debts due
to the taxpayen actually ascertained
to be worthless during the year are de
ductible. ~
Depreciation Of Property
Depreciation on property used II
\ a profession, in business, or In farm
1 ing is another item that may bt
claimed as deduction. The store
keeper may claim depreciation on hi
fixtures, and on his delivery horses
and wagons, but not on his stock hell
for sale. The professional man ma!
claim similar deduction on his instru
ments; and, in case of q physician
who maintains q team or auto 10
making his calls on patients, reason
able depreciation may be claimed. Tn
farmer may claim depreciation on M
farm buildings, aside from his pei
Il sonal residence, also on his arm ma
chinery, his work horses and farn
u ysnrl, ,,,a song The theory of deprecta