St. Tammany farmer. [volume] (Covington, La.) 1874-current, 1919-01-25
WHO MUST PAY INCOME TAX
AND HOW TO FIGURE IT.
CONTINUED from page u


"A person buying and selling mer
chanidse 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 purchase of goods for resale.
From this latter sum subtract the in
ventory of goods on hand at the end
of the year, and the result is the
cost of the goods sold. This cost,
plus necessary expenses incurred
solely through conduct of the bust
ness, is to be deducted from the gross
sales, and the result is the net earn
ings of the business.
"A professional man arrives at his
professional income by sascertaining
the total of fees for services and de-
Quoting therefrom all expenses con-
necLed directly and solely with his
practice.
"A farmer must figure up all in
come from the sale or exchange of
products during the year, whether
such porduce was raised on the farm
or purchased and resold. He is al
lowed to deduct from this total his
expenses of the year connected with
the planting, cultivation, harvesting
and marketing of the crop. of the
care, feeding and marketing of live
stock. He is not allowed to deduct
the amount expended in 1918 in pur-
chasing stock for resale; but when
ing during the year thorugh person
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 cOnnOt
be deducted as in the case just cited,
if such cost was included in the de-
duction made in the year of purchase.
1.-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., the market
value of the articles received in eX
change must be included.
'All other items of income ari5-
al service, business or trade, through
use of property or money, should be
added into the gains for 1918.
income is exempt from tax Very
few plums that fall to the average
man can be legally disregarded in fig
uring up his 1913 income. Gifts and
requests can be eliminated; also pro
ceeds of life insurance received by
the beneficiary of an insured person.
A person who cashed in an endow-
ment 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 receiv-
ed in the year payments which repre-
sent, when added to all prior pay
ments on the annuity, an amount
greater than the original cost of the
annuity. Dividends on uneXpired
life insurance policies are not tax
able income but dividends on paid
up policies must be considered in
come. Alimony is not income to the
recipient, nor is it an allowable de-
duction on the part of the person
who pays.
From the total of all items of in
come, there are certain deductions
allowable by law. All interest paid
on personal Indebtedness and all tax
es paid during the year are de-
ductible, except Federal income and
excess profits taxes, inheritance tax
es and assessments for local improve
ments, such as sidewalks, sewers, etc
Losses incurred in business or trade
are allowable, also losses arising
from fires, storms, shipwreck or
other casualty, or from theft, in
cases where such losses are not COM
pensated for by insurance or other
wise. Losses incurred outside of a
persons regular business are allow
able to the extent of gains reported |