The Kennewick courier-reporter. [volume] (Kennewick, Wash.) 1914-1938, 1919-01-23

nected directly and solely with his
practice.
ga farmer must figure up all in
come derived from the sale or ex-
change of products during the year,
whether such product 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 planning, cultivating, 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 1913 in
purchasing stock for resale; but when
such stock is sold its cost is to be de-
Quoted from sale price in ascertaining
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 deduction 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., the market
value of the articles received in ex-
change must be included.
Cali other items of income arising
during the year thru personal service,
business or trade, thru use of proper
ty, or money, should be added into
the gains for 1918.
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 fgur-
ing up his 1918 income. Gifts and be-
quests can be eliminated; also proceeds
of life insurance received by the bene-
fciary of an insured person. A per-
son who cashed in an endowment pol
icy need report as income only that
portion which exceeds the total of the
premiums he paid in all years on that
policy. Anlluities are not taxable, un-
less the person received 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 un-
expired life insurance policies are not
taxable income but dividends on
paidup 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 al
lowablc by law. All interest paid on
personal Indebtedness and all taxes
paid during the year are deductable,
except Federal Income and Excess
Profits taxes, inheritance taxes and
assessments for local improvements,
such as sidewalks, sewers, etc. Losses
incurred in business or trade are al
lowable, from theft, in cases where
such losses are not compensated for
by insurance or otherwise. Losses
incurred outside of persons regular
business are allowable to the extent
of gains reported from similar tans-
actions within the year. Debts due to
the taxpayer actually ascertained to
be worthless during the year are de-
ductable.
Depreciation on property used in
a profession, in business, or in farm
ing is another item that may be claim
ed as a deduction. The storekeeper
may claim depreciation on his fixtures,
and on his delivery horses and>wagons,
but not on his stock held for sale. The
professional man may claim similar
deduction on his instruments; and, in
the case of a physician who maintains
team or auto for making his calls
on patients, reasonable depreciation
may be claimed. The farmer may
claim depreciation on his farm build
ings aside from his personal residence
also on his farm machinery, his work
horses and farm work teams. The the
DRY of depreciation, in connection with
the income tax, is that wear and tear
caused by use in earning income is
a real expense in the earning of that
income. The rate is determined. by
the number of years that the property
ordinarily would be useful, and the
cost of the property is the basis of
the computation. If the property suf-
fering depreciation was bought or ac-
quired pior to March 1, 1913, the mar
ket value as of that date is used in
stead of the cost in figuring deprecia-
ton.