New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-02-20


swered in the column.
;AddTess all correspondence to
lax Service Department, Tribune
BUSINESS News Bureau, 1874 Nassau
street, New York City.
Question: VIII you please advise
me if, under the new law, corporate
dividends are to be taxed at the rates
applicable to the years in which the
earnings of corporations distributing
such dividends were accumulated. or
whether all dividends received in 1918
arc to be taxed at the rates effective
for 1918
Answer: ] am of opinion that cash
dividends received during 1918 are
taxable at the rates effective for 1918,
regardless of the year in which the
earnings from which such dividends
were paid, were accumulated.
Stock dividends shall be taxed at the
rates applicable to the year in which
received, except as provided under
subdivision Cd of Section 2OI, If such
taxpayer between January l and No
vember ], 1918. or GU was, during such
period, bona fide authorized or de-
ciared and entered on the books of the
corporation, and is received by the tax
payer after November |, 1918. and be-
fore the expiration of thirty days after
the passage Of this act. In the above
excepted cases, stock dividend is
subject to tax at the rates prescribed
for the years in which the corporation
accumulated the earnings or profits
from which such dividend was paid,
but the dividend shall be deemed to
have been paid from the most recently
accumulated earnings Or profits.
Subdivision (e) of Section 201 has
caused considerable confusion as re-
CARDS the ALLEGATION of dividends for
the purpose of taxation to the indi-
vduaI stakeholder. From the text Of
this section, it seems clear that it was
not intended to affect the rates of tax
alton on dividends received by the
stakeholder.
The above provision is confusing and
will doubtless be cleared up by regu-
lations which will be issued by the
Treasury Department.
Questions -(A) From my wage earn
ings I bought some common stock of
the Federal Dyestuff and Chemical
Company in 1917. During 1913 the
company, having gone into a receivers
hands by forced sale of prior liens,
was sold out and the common stock
was absolutely wiped out. Can | de-
of my 1917 earnings so lost?
OBJ | have seen it stated in print
that fire insurance premiums paid out
on farm buildings not occupied by the
owner but rented out can be deducted.
Is this correct? If so, can premiums
for fire insurance on dwelling occu-
pied by the owner be deducted?
Answers-(A The loss which you
sustain through the bankruptcy of the
Federal Dyestuff and Chemical Com
pany is deductible from 1918 earnings
OBJ You are correctly informed as
to the deductibility of fire insurance
However, premiums for fire insurance
on a dwelling occupied by the owner
are not deductible.
Questions AZ have a brother who
is a helpless invalid, requiring the con-
slant services Of one attendant and the
occasional services of another. His ex-
penses practically consume every cent
OF his income, which latter consists
solely of payments made to him under
health and sickness policy which he
took out prior TO his illness. 1t is
our feeling that the income tax law
does not contemplate the payment of
a tax upon an income of this kind.
should, however, like very much the
benefit of your Judgment as to this
OBJ | am unmarried, but am the sole
support of my mother. seventy EIGHT
years Of age. Would | not be entitled
to exemption upon $4,000 instead of
$1,000, as in the case Of the ordinary
single man without dependents ?
Answers (A) Amounts received
through accident or health insurance
Or. under workmen's compensation ACT
as compensation for personal injuries
or sickness. plus the amount of any
damages received whether by suit or
agreement on account of such injuries
or sickness, arc exempt from income
tax.
(B) If YOU and your mother live to-
gether in a home which you maintain
you are the head of family and are
entitled to personal exemption of
$1,000 as such and an additional 5000
for your mother if she is incapable of
self-support.
Question: am working on commits
sion basis and earned several thousand
dollars during the year of 1918, but
Will only get Il settlement and paid for
same in 1919. Must report that in
come for 1918 or 1919? T.. r.,
Answers. If you keep your books on
an accrual basis you must report all
commission earned during 1918, even
though some or all of the same will |
not be paid in 1919. If your books are
kept on basis a. essh received AK.
disburscd such commissions should not
be reported as income until actually
received. III you do not keep any hooks
your return should show tho income
received.