Five Mile Beach weekly journal., 1919-01-24
business.

PROFESSIONAL income by aScertalnlnR the
total of fees for services and deducting
therefrom all expenses connected di-
rectly and solely with his practice.
IA farmer must figure up all income
derived from the sale or exchange Of
products during the year, whether such
produce was raised on the farm or pur-
chased and resoId. He is allowed to
deduct from this total his expenses of
the year connected with the planting,
cultivation, harvesting and marke ing
of the crop, or the care, feeding and
marketing of live stock. He is not al
lowed to deduct the amount expended
in 1918 in purchasing stock for resale;
but when such stock is sold its cost is
to be deducted from sale price in ascer-
tanning 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 deduc-
ton made in the year of purchase.
1.-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
vice, business or trade, through use of
property 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 figuring up
his 1918 income. Gifts and requests
can be eliminated; also proceeds of life
insurance received by the beneficiary
of an insured person. A person who
cashed in an endowment policy need
report as income only that portion
which exceeds the total of the premi-
ums he paid In all years on that policy.
Annuities are not taxable, unless 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 mex
pired life insurance policies are not
taxable income; but dividends on paid
up policies must be considered income.
Alimony is not income to the recipient,
nor is 1t an allowable deduction on the
part of the person who pays.
"From the total all items of income,
there are certain deductions allowable
by law. All interests paid on personal
Indebtedness and all taxes paid during
the year are deductible, except Federal
income and excess profits taxes, in
heritance taxes and assessments for
local Improvements, such as sidewalks,
sewers, etc. Losses incurred in bust
ness or trade are allowable, also losses
arising from fires, storms, shipwrecks
or other casualty, or from theft, in cases
where such losses are not compensated
for by insurance or otherwise. Losses
incurred outside of a PERSONS regular
business are allowable to the extent of
gains reported from similar transac-
tions within the year. Debts due to
the taxpayer actually ascertained to be
worthless during the year are deduc-
tible.
"Deprec.ation on property used in g
profession, in business, or in farming
Is another item that may be claimed as
a deduction. The s~torekeeper 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 de-
duction on his instruments and, in the
case of a physician who maintains a
tt am or auto for makinghis calls on pa
tients, reasonable depreciation may be
claimed. The farmer may claim de-
probation on his farm buildings, aside
from his personal residence, also on his
farm machinery, his work horse and
farm work wagons. The theory OF
depreciation, in connection with the
income tax, is that wear and tea
caused by use in earning incomeis q 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 computa
ton. If the property suffering deprec
iation was bought or acquired prior to
March LIST, 1918, the market value al
of that date is used, instead of the cost
in figuring depreciation.
contributions or gifts actually mad
In 1918 to organizations operating ex
clusively for religious, charitable, ecien-