The Bridgeport times and evening farmer., 1919-01-20

harvesting ana marketing or the crop, or the care, feeding and market ing 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 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 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- cIude in his income tax computation the value of farm produce consumed by himself and family. But in the cases where he exchanges produce for merchandise, groceries, etc., the market value of the articles received in exchange must be included.
 "All other items of income arising during the year through personal service, business or trade, through use of property or money, should be added Into the gains for 1918.
 Everybody wants to know what
 
 few plums that fall to the average man may be legally disregarded in figuring up his 1918 income. Gifts and bequests can be eliminated; also proceeds of life insurance received by the beneficiary of an insured person. A person who cashed in an endow- ment 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, unless the person re- ceived 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 en uneXpired life insurance policies are not taxable in- come; but dividends on paid-up poli- cies must be considered income. Ali mony 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 allowable by law. All interest pai5 on personal indebtedness and all taxes paid during the year are de- | ductible, except Federal Income and | Excess Profits taxes, inheritance | taxes and assessments for local inn provements, such as sidewalks, sew CTS, etc. Losses incurred in business or trade are allowable, also losses arising from fires, storms, shipwreck 1 or other casualty, or from theft, in cases where such losses are not com ! pensated for by insurance or other wise. Losses incurred outside of a persons regular business are allowa- | ble to the extent of gains reported from similar transactions within the i year. Debts due to the taxpayer l actually ascertained to be worthless during the year are deductible.
 Depreciation on property used in a profession, in business. or in farm ing is another item that may be claimed as a deduction. The store keeper 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 deduction or his instruments; and, in the case o1 a physician who maintains a team ol auto for making his calls on patients reasonable depreciation may be claimed. The farmer may claim de. preciation on his farm buildings aside from his personal residence l also on Ll5 farm machinery, hi: work horses and farm work wagons The theory of depreciation, in con nection with the Income Tax, is tha wear and tear caused by use in earn. ing income Is 8 real expense in tht earning of that income. The rate Il determined by the number of year that the property ordinarily would b. useful, and the cost of the propert, in the basis of the computation. I the property suffering deH~eciatiol was bought or acquired prior tt March i, 1913. the market value a of that date is used, instead of ths cost, in figuring depreciation.
 Contributions or gifts actually made in 1918 to organizations oper ating exclusively for religious, char itable, scientific or education pur poses, and to societies for the proven tion of cruelty to children or animals may be deducted, to an amount no exceeding IS per cent. of the net in come computed within the benefit o this deduction.
 After the total of all income i found, and the deductions allowabl by law have been computed as al offset, the amount of income in ex cess of such deductions is the net in come, which forms the basis of th assessment of tax
 T want to emphasize the cooper ative feature of the collection of tn Income Tax this year. The policy o the Internal Revenue Bureau is to ai taxpayers to meet the requirements 0 the law. We are going right to tn people, not to swing clubs or to mule the wage earner of his savings, bu poffering every helpful governmenta function that will assist people to d. their duty"