Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1919-02-19

30 Y y. l. = /. y E
market value Of the articles receiv-
ed in exchange must be included.
"AlI other items Of income arising
during the year through personal
service, business or trade, through
use of money or property, should be
added into the gains for 1918.
Insurance Interest Taxable.
Everybody wants to know what
income 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; al
so proceeds of life insurance receiv-
ed by the beneficiary of an insured
person. A person who cashed in an
endowment policy need report as in
come only that portion which ex-
ceeds the total of the premiums he
paid in all years on that policy. An
nuities are not taxable, unless the
person received in the year pay
ments which represent, when added
to all prior payments on the annu-
ity, an amount greater than the
original cost of the annuity. Divi-
dends on unexpired life insurance
policies are not taxable income; but
dividends on paid-up policies must
be considered income. All money 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
its taxes, inheritance taxes and assess
ments for local improvements, such as
sidewalks, sewers, etc. Losses incur
red in business or trade are allowable,
also losses arising from fires, storms,
shipwreck or other casualty, or from
theft, in cases where such losses are
not compensated for by insurance or
otherwise. Losses incurred outside of
persons regular business are allow
able to the extent of gains reported
from similar transactions within the
year. Debts due to the taxpayer &C.
tually ascertained to be worthless dur
ing the year are deductible.
Depreciation Claims.
Depreciation on property used in
a profession or business, or in farm
ing is another item that may be claim
ed as deduction. The storekeeper
may claim depreciation on his fix
lures, 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 physi-
clan who maintains team or auto
for making calls on patients, reason
able depreciation may be claimed
The farmer may claim depreciation or
his farm buildings, aside from his
personal residence, also on his farm
machinery, 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.
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 depre-
citation was bought or acquired prior
to March 1, 1913, the market value as
of that date is used, instead of the
cost, in figuring depreciation. Il,
Can Deduct Contributions.
81 Contributions or gifts actually
made in 1918 to organizations operat-
ing exclusively for religious, charita-
BILE, scientific or educational purposes,
and to societies for the prevention of
cruelty to children or animals, may be
deducted, to an amount not exceeding
Is per cent of the net income COM
puted without the benefit of this de-