The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1919-01-29

The balance is included in gross in
come for the year.
!: Interest on bank deposits, wheth-
er withdrawn or added to his bank
!.balarces, must be included in all cal
j;culntions OF income. Bond interest
.received during the year must also be
included, except interest on munici-
/ pal county Or State bonds. Interest
on United States bonds need not be
included. by the ordinary bond hoad-
er who purchased small amounts
Holders OF large amounts Of Liberty
bonds, however, should ask their
rsrankors to write to my Office for the
rule applying to tax on such inter
est.
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
tons
"a person buying and selling mer-
chandise 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 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 neces-
sary expense incurred solely through
conduct CT the business, is to be, de-
Quoted from the gross sales, and the
result is the net earnings 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 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 to-
tai his expenses Of the year connected
with the planting. cultivation, har-
vesting marketing of the crops, Or the
care, feeding and marketing OF live
stock. He is not allowed to deduct
the amount expended in 1913 IN pur-
chasing stock for resale; but when
such stock is sold its cost is to be de-
Quoted from sale price in ascerta1nlng
the gain to be included in his re-
turn of income. The cost price Of
stock bought prior to 1911 can not be
deducted as in the case just cited, if
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 tex computation
the value Of farm produce consumed
by himself and family. But in cases
where he exchanges produce for n1er-
chandise, 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
service, business or trade, through
use Of property or money, should be
added to the gains for 1918.
Everybody wants to know what
income is exempt from tax. Very few
plUIlS lIlHl ldit W lNc d'Cid6C man
may be legally disregarded in fig
uring up his 1918 income. Gifts and
beouests can be eliminated; also pro-
cceds of life insurance received by
the beneficiary Of an insured person.
A person who cashed in an endow-
mcnt policy need report as income
only that portion which exceeds the
total Of the premiums he paid in all
years or that policy. Annunities are
not taxable. unless the person re-
ceired in the year payments which
represent. when added to all prior
payments on tho annuity. an amount
greater than the original cost Of the /
annuity Dividends Of uneNpired life t
insurance policies are not taxable in I
core; but dividends on paid up poli- !
cies must be considered income. ALI
,nony is not income to the recipient
nor is it an allowable deduction on
the part OF the person who pays.