The Owosso times. (Owosso, Mich.) 1897-1926, 1919-01-24


(Con'nuef from maze ne
his income for 1918 was sufficient Il
make a sworn return.
"The year 1918 was banner year
for salaries and wages, and the high
war prices brought unusual profits t.
the average small tradesman and te
the farmer. The opinion in Washing
ton is that million citizens and resi-
dents will make this year their first
income tax returns.
GAIL signs indicate that the income
tax this year will reach nearly every
working man and woman, and nearly
every merchant, shop keeper and
farmer. Not all will have to pay the
tax, but nearly all will be obliged to
make sworn statement of the years
income.
81 am therefore advising every un-
married person who earned 1000 or
over during the year 1918, and every
married person, who together with
wife or husband, earned $4,000, to
sharpen his pencil and figure out how
he stands.
"He must ascertain accurately his
gross income from all sources. There
is his salary or wages, including owe.
time pay and any bonus received as
additional compensation. A married
. person having children under 18 who
are working should include the earn
ings of such children. If he sold any
property at profit, the gain must be
computed and included in gross in
come. If he rented any property to
other persons, the total rents receiv-
ed in the year must be ascertained,
and from that figure a deduction may
be taken for taxes paid on rented
property, the necessary minor repairs,
fire insurance, any interest he may
have paid on mortgage, and a reason
able allowance for annual wear and
tear of the rented property The bal"
ance is included in gross income for
the year.
Interest on bank deposits, wheth-
er withdrawn or added to his bank ball
ances, must be included in all calcula-
lions of income. Bond interest re-
ceived during the year must also be
included, except on municipal, county
or state bonds. Interest on United
States bonds need not be included by
the ordinary bond holder who pur-
chased small amounts. Holders of
large amounts of Liberty bonds, how
ever, 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, although the law does
not impose the normal tax on distri-
buttons 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 sale
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 through con-
duct 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 fl Up all
income derived from the s..-e or ex-
change of products during the year,
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, har-
vesting and marketing of the crop, or
the care, feeding and marketing Oh
live stock. He is not allowed to de-
duct the amount expended in 1918 in |
purchasing stock for resale; but when |
such stock is sold it's cost is to be de- |
Quoted 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 deduct
ed 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 include in his |
income tax computation the value of |
farm produce consumed by himself |
and family. But in cases where he
exchanges produce for merchandise,
groceries, ETC., the market value of the
articles received in exchange must be
included.
Cali other items of income arising
during this year through personal SER
vice, business or trade, through use Of |
or money, should be added
into the gains for 1918. Everybody
wants to know what income is exempt |
from tax. Very few plums that fail
to the average man may be legally
in figuring up his 1919
income. Gifts and requests can be
eliminated; also proceeds of life IT,
surance received by the beneficiary
Of an insured person. A person who
cashed in an endowment policy nseo
report as income only that portion
which exceeds the total of the pre-
miums he paid in all years on that
policy, Annuities are not taxable,