Baxter Springs news., 1919-01-31

interest," on Dank oepositsJ Wnctnor
withdrawn or added to his bank bal
ance must be included In all calcula-
tions 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 Staes Bonds must not be
included by the ordinary bond holder
who purchased small amounts. Hold
ers Of large amounts Of Liberty bonds
however, should ask their bankers to
write to my office for the rule apply
ing to tax on such interest.
Dividends on stock shares are in
come, and must be included in the
gross figures, although the law does
not impose the normal tax on distri-
buttons made by domestic corpora
ti0ns.
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
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 nee
essary expenses incurred solely thru
conduct Of the business is to be de-
Quoted from the gross sales, and the
result is the net earning of the bus
mess.
A professional man arrives at his
professional income, by ascertaining
the total of fees for services and de-
ducting therefrom all expenses con-
nected directly and solely with his
practice.
A farmer must figure up all his 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 total
his expenses of the year connected
with the planting, cultivation, har-
vesting 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 de-
Quoted from the 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-
tion 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 product for mer-
groceries, etc., the market
value of the articles received in ex-
change must be included.
All other items Of income arising |
during the year through personal ser
vice, business or trade, through use
Of property or money. should be added
into the gains for 1913:
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 figur-
ing up his 1918 income. Gifts and be-
quests can be eliminatedI 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,
unless the person received in the year
payments which represent, when ad-
ded to all prior payments on the an
nuity, an amount greater than the or
iginal cost of the annuity. Dividends
on unexpired life insurance policies |
are not taxable income; but dividends
on paid-up policies must be consider
ed income. Alimony 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
lowable by law, All interest paid on
personal indebtedness and all taxes
paid during the year are deductible,
except Federal Income and Excess
Profits taxes, inheritance taxes and
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
g., I,y