The Delta independent., 1919-01-24

withdrawn or added to his bank bal
ances, must be included in all calcu
lations of income. Bond interest
received curing the year must also
included, except interest on municipal
county or state bonds. Interest on
United States Bonds need not be in
cluded by the ordinary bond holder
who purchased small amounts. Eol'
ers of large amounts of Liberty bonG !;
however, should ask their bankers to
write to my office for the rule apply
ling to tax of 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 dis
tributions made by domestic corpor-
ations.
''A person buying and selling mer-
chandise must find his profits for the
year on the following basis; First. =
certain the gross sales or total ca.l
receipts. Then add together the in
+ventory at the beginning of the ye n
and the purchases of goods Tor ro-
SALE From this-latter sum substract
the inventory of goods on hand at
the years end, and the result is the
cost of goods sold. This cost plus
expenses incurred solely
through conduct of the business, is
to be deducted from the gross sales
and the result is the net earnings
of the business.
"A professional man arrives at his
professional income by ascertaining
the total fees for services and deduct
ing therefrom all expenses connect
ed directly and solely with his prac-
tice.
"a farmer must figure up all income
derived from the sale of exchange or
products during the year, whether
such produce was raised on the farm
or purchased and reshld. He is allow
ed to deduct from this total his ex-
penses of the year connected with the
planting. cultivation, harvesting and
of the crop, or the care,
feeding and marketing of live stock.
He is not allowed to deduct the
amount expended in 1918 in purchas-
ing stock for resale; but when such
stock is sold it's cost is to be deducted
from sale price in ascertaining the
gain to be included in his return of in
come. The cost price of stock bought
prior to 1917 cannot be deducted as in
the case just cited, if such cost was in
or purchesd and resold. He is allow
year of purchase.
"The farmer is not required to in
cluded in the deduction made in the
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-
changes produce for merchandise,
groceries, ETC.. the market value of
the articles received in exchange
must be included.
"All their items of income arising
during the year through personal SER
vice, business or trade, through use
of property or money, should be ad-
ded into the gains Of 1913.
Everybody wants to know what
income 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 eliminated also pro-
ceeds of life insurance received by
the beneficiary of an insured person.
IA 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 rep
resent, 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 taxable in
come; but dividends, On paid-up poll
cies must be considered income Ali
mony is not income 10 the recipient
the part Of the person who pays.
From the total " 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 deduct
dble except federal income and excess
profits taxes, inheritance taxes and
for local Improvements,
such as sidewalks. sewers, etc. Loss
es incurred in business or trade are
|'allowable, also losses arising from
fires. storms, shipwreck or other cas-
ualty. or from theft, in cases where
such losses are not compensated TOR
by insurance or otherwise. Losses
incurred outside Of a. persons regular
business are allowable to the extent
of gains reported from similar trans
actions within the year Dahfa due