The Arizona copper camp., 1919-01-25
BIC INCOME TAX DRIVE COMING;
COLLECTOR FRANKLIN EXPLAINS
PROVISIONS OF REGULATIONS


and the purchases of goods for resale.
From this latter sum subtract the in
ventory of goods on hand at the years
end, and the result is the cost of goods
Sold This cost plus necessary ex-
penses incurred solely through con-
duct of the business, is to be deduct
ed from the gross sales, and the re-
suit is the met earnings of the busi-
ness.
A professional man arrives at his
professional income by ascertaining
the total of fees for services and de-
Quoting 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 total
his expenses of the year connected
with the planting, cultivation, harvest
ing and marketing of the crop, or 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
such stock is sold, it's cost is to be
deducted from sale price in ascertain
ing the gain to be included in his re-
turn of income: The cost price of
stock bought prior to 1917 cannot be
deducted as in the case just cited, ii
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 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 arising
during the year through personal SER
vices, business or trade, through use
of property or money, should be added
into the gains for 1918
Everyone desires to know what
income is exempt from tax. Gifts and
bequests can be eliminated; also pro-
ceeds from 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 re-
ceived 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 unexpired life
insurance policies are not taxable IN
come: but dividends on paid-up poll
| cies must be considered income. ALI
mony 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 prof
it's taxes, inheritance taxes and as
sessments 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 sucn
losses are not compensated for by in
surance or otherwise. Losses incurred
outside of a persons regular business
are allowable to the extent of gains
reported from similar transactions
within the year. Debts due to the tax
uayer actually ascertained to be
worthless during the year are deduct
ible.
depreciation on property used in
a profession, in business, or in farm
1
ing is another item that may be
claimed as a deduction. The store
keeper 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 instru-
ments; and, in the case of physician
who maintains a team or auto for
making his calls on patients, reason
able depreciation may be claimed. The
farmer may claim depreciation on his
farm buildings, aside from his per-
sonal residence, also on his farm ma
chinery, his work horses and farm
work wagons The theory of depre-
citation, in connection with the income
tax, is that wear and tear caused by
use in earning income is a real ex-
pense in the earning Of that income.