The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1919-01-31

rule applying to tax on such inter-
est.
Dividends on stock shares are in
come, and must be included i'm the
gross figures, although the law does
not impose the normal tax on dis
tributions made by domestic corpora
tions.
"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
receipts. Then add together the in
ventory at the beginning of the year
and the purchases of goods for re-
sale. From this latter sum subtract
the inventory of goods on hand at the
years end, and the results is the cost
of goods sold. This cost, plus neces-
sary expenses incurred solely through
conduct of the business, is to be de-
Quoted from the gross sales, and the
result is the net earnings of the bus
mess.
"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 Of 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 con-
nected with the planting, cultivation,
harvesting 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 purchasing stock for resale; but
when such stock is sold its cost is
{ be deducted from sale price in as
certaining 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 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 aris-
ing during the year through person
al service, business or trade, through
use of property of money, should be
added into the gains for 1918.
"Everybdy wants to know what in
come is exempt from tax. Very few
plums that fall to the average man
MY re legally disregarded in fig
uring up his 1913 income. Gifts and
requests can be eliminated; also pro-
Ceeds of life insurance received by
the beneficiary of an insured per-
son. A person who cashed in an in
dowment policy need report as in
come only that portion which exceeds
the total of the premiums he paid in
all years on that policy.
Annuities are not taxable, unless |
the person received in the year pay |
ments which represent, when added !
to all prior payments Oh the annuity |
an amount greater than the original |
cost of the annuity. Dividends on !
life insurance policies are /
not taxable income; but dividends on
paid up policies must be considerer
income. Alimony is not income to the
recipient, nor is il an allowable de-
pays.
From the total of all items of in
come, there are certain deductions al
owable by law. All interest paid on
personal Indebtedness and all taxes
paid during the year are deductible,
except Federal Income and Excess
profits taxes, inheritance taxes and
for local Improvements,
such as sidewalks, sewers, etc. LOS
,es incurred in business or trade are
allowable, also losses arising from
Tres, storms, shipwreck or other cas-
Ialty. or from theft, in cases where
such losses are not compensated for
~ insurance or otherwise. Losses
incurred out side of n persons reg
liar business are allowable to the
extent of gains reported from similar
within the year. Debts
lue to the taxpayer actually ascer-
aimed to be worthless during the
'ear are deductible.
Depreciation on property used in
in business, or in farming
S another item that may be claimed
is deduction. The store keeper
nav claim denreciation On his fin