The Glenwood post., 1919-01-25

he stands.
"He must ascertain accurately his
gross income from all sources. There s
his salary or wages, including overtime
pay and any bonus received as addi-
tional compensation. A married person
having children under 1S who are work
ing would include earnings of such
children.
elf he sold any property at a profit,
the gain must be computed and includ
ed in gross income. If he rented any
property to other persons, the total
rents received in the year must be as
certained, and from that figure a de-
duction may be taken for taxes paid
on rented property, the necessary minor
repairs, insurance, any interest he may
have paid ON mortgage, and reasona-
BILE allowance for annual wear and tear
of the rented property. The balance is
included in gross income for the year.
"Interest on bank deposits, whether
withdrawn or added to his bank bal
ances, must be included in all calcula-
tions of income. Bond interest received
during the year must also be included
except interest in municipal, county or
state bonds. Interests on United States
bonds need not be included by the or
dinary bondholder who purchased small
amounts. Holders of large amounts OF
Liberty bonds, however, should ask
their bankers 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 i'm
pose the normal tax on distributions
made by domestic corporations.
"a person buying and selling mer-
chandise must find his profits for the
year on the following basis: First, as-
certain the gross sales or total cash re-
ceipts. Then add together the inven-
tory at the beginning of the year AMI
the purchases of goods for resale.
From this latter sum subtract the in
ventory of goods on hand at the year s
end, and the result is the cost of goods
sold. This cost, plus necessary ex-
penses of the business, is to be deduct
ed from the, gross sales, and the result
is the net earnings of the business.
ga professional man arrives at his
professional income by ascertaining the
total fees for services and deducting
therefrom all expenses connected di-
rectly and solely with his practice.
due to the taxpayer actually ascer-
tanned to be worthless during the year
are deductible.
depreciation on property used in u
profession, in business, or in farming Is
another item that may be claimed as
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 profcs-
sional man may claim similar deduction
on his instruments; and, in case of a
physician who maintains team or
auto for making his calls on patients,
reasonable depreciation may be claim
ed. The farmer may claim deprecia-
ton on his farm buildings, aside from
his personal residence, also on his farm
machinery, HIS work horses and farm
work wagons. The theory of deprecia-
ton, in connection with the income tax,
is that wear and tear caused by use in
earning income is real expense IN
the earnings of that income. The rate
is determined by the number Of years
that the property would ordinarily be
useful and the cost of the property is
the basis of the computation. If the
property suffering depreciation was
bought or acquired prior to March l.
1918. the market value as of that date
is used, instead of the cost in figuring
depreciation.
Contribution or gifts actually made
in 1918 to organizations operating ex'
clusively for religious, charitable, sci
entific or educational purposes, and -
societies for the prevention of cruelty
to children or animals, may be deduct
ed, to an amount not exceeding Ii per
cent of the net income computed with
out the benefit of this deduction.
"After the total of all income is
found, and the deductions allowable by
law have been computed AS an Offset,
the amount of income in excess of such
deductions is the net income, which
forms the basis of the assessment of
taxi
John Bennett of Carbondale passed