The courier-index., 1919-01-24

|
whether such produce was raised on
the farm or purchased and resoid.
He is allowed to deduct from this
/ total his expenses of the year con-
nected with the planting, cultlva-
! ton, harvesting and marketing OF
the crop. or the care, feeding and
marketing of live stock. He is not
! allowed to deduct the amount ex-
pended In 1918 in purchasing stock
for resale: but when such stock is
sold its 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 de-
Quoted as in the case just cited, II
such cost was included in the de-
duction made in the year of pur-
| chase
| THE farmer is not required to in
clude in his income tax computa-
ton the value of farm produce con-
sumed by himself and family. But
/ in cases where he exchanges pro-
duce for merchandise, groceries, ETC.,
| the market value of the articles re-
/ ceiyed in exchange 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 into the gains for 1918.
Everybody wants to know what
/ ;,.a &c Very.
| few plums that fall to the average
man may be legally disregarded in
| figuring up his 1918 income. Gifts
and requests can be eliminated;
also proceeds of life insurance re-
| ceived by the beneficiary of an in.
sured 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 the years on that pol
icy Annuities are not taxable, unless
the person received in the year pay
ments which represent. when added
i TO all prior payments on the annu-
ity, an amount greater than the orig
inal cost of the annuity. Dividends
on unexpired life insurance policies
are not taxable income; but divi-
dends on paidup policies must be
considered 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
allowable by law. All interest paid
on personal Indebtedness and all
taxes paid during the year are de-
ductible, except Federal Income and
Excess Profits taxes, inheritance tax
es and assessments for local i'm
provements, such as sidewalks, sew
ers, etc. Losses incurred in bust
ness or trade are allowable, also
losses arising from fires, storms, ship
wreck or other casualty, or from
theft, in cases where such losses are
not compensated for by insurance
or otherwise Losses incurred out
side of a persons regular business
are allowable to the extent of gains
reported from similar transactions
within the year. Debts due to the
taxpayer actually ascertained to be
worthless during the year are de-
ductible.
Depreciation on property used in
profession, in business, or in farm
ing is another item that may be
claimed as 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 profess
sional man may claim similar deduc
! ton on his Instruments; and, in the
case of physician who maintains
team or auto for making his calls
on patients, reasonable depreciation
may be claimed. The farmer may
ings,. aside from his personal resi-
| dence, also on his farm machinery,
his work horses and farm work
wagons. The theory 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 COM
putation. If the property suffering
depreciation was bought or ac-
quired prior to March l, 1913, the
market value as of that date is
used, instead of the cost, in figur-
ing depreciation.
Contributions or gifts actually
| made in 1918 to organizations oper-
alton exclusively for religious, char
table, scientific or education pur-
poses, and to societies for the pre-
vention of cruelty to children or
animals. may be deducted, to an
| amount not exceeding Is percent of
the net income computed without
| the benefit of this deduction.