Evening journal., 1919-02-27

not have TO pay q tax must ale re-
turns.
A head OF a family is described Of
flclally as "a person who supports one
or more persons closely connected with
him by blood relationship, relationship
by marriage or by adoption"
The compensat on in 1918 OF a man
in the military or naval service, either
as an enlisted man or an officer, Is
wholly exempt from taxation. provided
this did not exceed $500. Income Of
soldiers or sailors from private sources
is taxable, however, II 1t exceeds the
exemptions.
In figuring the net income. deduction
may not be made for personal, family
o. Living expenses.
Allowable Deductions
The law does prov de for a numbec
OF deductions. however. from gross in
come, and these are Of great interest
mainly 10 men who made a living out
OF business enterprises. These allow
able deductions include the following
items.
Expenses paid o. incurred during 1918
In carry ng on any trade or business,
including rentals and a reasonable al
lowance for salaries.
Interest paid or accrued in 1918, ex-
cept On indebtedness incurred for the
purchase OF tax exempt stocks or
bonds.
Taxes paid or accrued, except in
come, war profits and excess protits
taxes and these assessed against local
benefits OF a kind tending to improve
the value OF the property.
Losses in business or trade, II not
compensated for by Insurance or other
wise
Losses in any transaction entered in
to for profit In some side line Of busi-
ness.
Losses OF property not connected
with the taxpayers regular business II
arising from fires, storms or other cas-
ualt es, II not covered by insurance.
Worthless debts charged on during
the year.
A reasonable allowance for depletion
Of property used in business or trads.
A reasonable allowance for depletion
as well as depreciation Of property IN
the case OF mines. oil and gas wells
and other natural deposits.
Contribution to concerns operated ex-
clus.vely for charitable. rel!g Gus. e1u-
cational or scientific purposes not in
excess Of IS per cent. Of the taxpayers
net income.
Amortization on buildings, machinery
equipment or other facilities construct
ed or acquired for the production Of
articles contributing TO the prosecution
OF the war.
The preceding items must be reported
in the return and deducted according 10
the method set forth in the return
blank form.
The following items are exempt rom
taxat' on and need not be included in
The returns:
Proceeds OF life insurance policies
returns OF premiums on life, endow-
ment and annuity policies; gifts. b..
quests Of inheritanoes (income from
gifts Is taxable, however,; interest on
bonds Of any State, county o. munich
pality; interest on farm loan bonds
Interest on 5000 or less OF Liberty
Bonds, and on larger amounts in Ger
tain cases provided by the bond act;
payments on account Of accident or
health Insurance o. under workman's
compensation acts.
Detection OF Frauds.
To detect inaccuracies or fraud IN re-
turns, the internal Revenue Bureau has
instituted a system Of checking returns
with othe. reports required from all
persons or interests which paid out
$1,000 or more TO any individual during
the year. The latter reports constitute
the tax collecting machinery's "infor-
nation at the source" which proved so
last year in preventing tax
In addition 20 income taxes. there is
a multiplicity OF other taxes to be as
sessed this year. incorporated blsl-
nesses are required to pay taxes on net
incomes at the rate Of - PEI cent.
with an exemption Of 500. War profits
and excess-prohts taxes are assessed
against co. porations only.
The relative bureau has made pro-
vision for accepting tentative estimates
Of income in cases where taxpayers /
are not able to figure accurately Their ]
incomes before March IS. In these I
eases. however, an installment payment I;
of one-fourth Of the estimated amount
Is required. on that date, and FAX on
,ials will guard against any attempt ]
10. evade or minnie the tax payment
.hen through setting an unreasonably |
ow cGtlmate.