El Paso herald. (El Paso, Tex.) 1901-1931, 1919-02-03
Get Ready To Pay Your Income Taxes
How To Pay Them and What Upon

sary minor repairs, fire insurance,
any interest he may have paid on
mortgage, and a reasonable allowance
for annual wear and tear OF the rent
ed property. The balance is included
in gross income for the year.
Interest Receipts.
Interest on bank deposits, whether
Withdrawn or added TO his bank bal
ances. must be included IN all calcu-
lations OF income Bond interest re-
ceived during the year must also be
Included, except interest on munich
pal, county or state bonds Interest
on United States bonds need not be
included by the ordinary bond holder
who purchased small amounts. Hold
ers Of large amounts OF Liberty bonds.
however. should ask their bankers TO
write FOR the rule applying 70 tax on
such interest
Dividends on stock shares are in
come. and must be included in the
gross figures. although the law does
not impose the normal tax on dis
tributions made BY domestic corpor-
atlons-
Arriving at Profits.
"A person buying and selling mer-
chaudise must find his profits for the
year on the following basis: FEST,
ascertain the gross sales or total
cash receipts Then add together the
inventory at the beginning OF the
resale From this latter sum subtract
the inventory OF goods on hand at
the years end. and the result Is the
cost Of goods sold This cost. plus
necessary expenses incurred solely
through 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 az his
professional income by ascertaining
.H ~"
Quoting theretrom all expenses con-
nected directly and solely with HIS
practice.
Farmers Profits.
"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 10 deduct from the total his
expenses OF the year connected 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 pur-
chasing stock for resale; but when
such stock Is sold, It's cost is to be
deducted from sale price in ascertain
ing 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. II
such cost was included in the deduc-
tion made in the year Of purchase.
Where Produce Exchanged.
The farmer IS not required to IN
clude I'm 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 Re Included
"Al 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 OF 1918.
What Not To Tax.
Everybody wants 10 know what
income Is exempt from tax Very few
Dlums that fall to the average man
may be legally disregarded In figur-
Ing up his 1918 income Gifts and be-
quests can be eliminated: also pro-
ceeds Of lie Insurance received by
the beneficiary OF AZ insured person
A person who cashed IN an endow-
ment nolicy need renort IS income
only that portion which exceeds the
total OF the premiums he paid in all
years on that policy.
Annuities ore not fav~hie. unless