The Leavenworth echo. [volume] (Leavenworth, Wash.) 1904-current, 1919-01-24

over during the year 1918, and every
married person who together with
wife or husband earned $4,000, to shar-
pen his pencil and find out how he
stands.
"He must ascertain accurately his
gross income from all sources. There's
his salary or wages, including over
time pay and any bonus received as
additional compensation. A married
person having children under eighteen
who are working should include the
earnings of such children.
IF he sold any property at profit
the gain must be computed and in
cluded in gross income. If he rented
any property to other persons the to-
tai rents received in the year must be
ascertained, and from that figure a
deduction may be taken for taxes paid
on rented property, the necessary mi
nor repairs, fire insurance and inter-
est he may have paid on mortgage,
and reasonable allowance for annual
wear and tear of the rented property.
The balance is included in gross in
come for the year.
Interest on bank deposits, whether
withdrawn or added to his bank bal
ances, must be included in all calucu-
lations of income. Bond interest re-
ceived during the year must also be
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. Hold
ers of large amounts of Liberty bonds,
however, should ask their bankers to
write to my office for the rule apply
ing to tax on such interest.
Dividends on stock shares are in
come, and must be included in the
gross figures, altho the law does not
impose the normal tax on distribu-
tons made by domestic corporations.
"A person buying and selling mer-
chandise must find his profits for the
year on the following basis: First,
| ascertain the gross sales, or total cash
receipts. Then add together the in
ventory at the beginning of the year
and the purchases of goods for resale.
From this latter sum subtract the in
ventory of goods on hand at the years
end, and the result is the cost of goods
sold. This cost, plus necessary ex-
penses incurred solely thru 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 of fees for services and de-
Quoting therefrom all expenses con-
nected directly and solely with his
practice.
"a farmer must figure up all in
come derived from the sale or eX-
| change of products during the year,
whether such produce was raised on
| the farm or purchased and resold. He
is allowed to deduct from this total
his expenses of the year connected
with the planting, cultivation, harvest
ing and marketing 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 its cost is to be deducted
from sale price in ascertaining the
gain to be included in his return of
income. The cost price of stock
bought prior to 1917 can not be de-
Quoted as in the case just cited, if such
cost was included in the deduction
made in the year of purchase.
"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 thru personal service,
business or trade, thru use of prop
erty 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 figur-
ing up his 1918 income. Gifts and
requests can be eliminated; also pro-
ceeds 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
premiums he paid in all years on that
policy. Annuities are not taxable, I'M
less the person received in the year
payments which represent, when added
to all prior payments on the annuity,
an amount greater than the original