The Brookings register. [volume] (Brookings, Brookings County, S.D.) 1903-1971, 1919-01-30

confined from Page u
who purchased small amounts. Hold
ers of large amounts of Liberty Bonds.
however. should ask their bankers 10
write to my Office for the rule apply
ing 10 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 distribu-
tons made by domestic corporations.
How Merchants Figure
"A person buying and selling mer.
chandise must find his profits for the
year On the following basis: First,
ascertain the gross sales or total cash
receipts. Then add together the in
ventory al the beginning OF the year
and the purchase of goods for resale.
From this latter sum subtract the in
yentory 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 deduct
ed from the gross sales, and the re-
suit is the net earnings OF the bust
ness.
"A professional man arrives at his
professional income by as%certaining
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 income
derived from the sale or exchange of
products during the year, whether such
produce was raised on the farm or pur-
chased and resold. He Is allowed to
deduct from this 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 al
lowed to deduct the amount expended
in 1918 in purchasing stock for re-
sale; but when such stock is sold its
cost is 20 be deducted from sale price
in ascertaining the gain to be includ-
ed 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 pur-
chase.
Farmers Incomes
THE farmer is not required 10 in
clude in his income tax computation
of 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 arising
during the. year through personal SER
vice, business n trade, through use of
property or money, should be added
into the gains for 1918.
Exemptions
Everybody wants to know what in,
come is exempt from tax. Very few
plums that fall to the average man
may be legally d~isregarded in figuring
up his 1918 income. Gifts and be-
quests can be eliminated; also pro-
ceeds of life insurance received by the
beneficiary Of an insured person. A
person who cashed in an endowment
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, I'M
less the person received in the year
payments which represent. when add
ed to all prior payments on the an
| nuity. an amount greater than the orig
inal cost of the annuity. Dividends on
unexpired life insurance policies are
net taxable income; but dividends on
paid up policies must be considered in.
Come. Alimony is not income to the
: recipient. nor is 1t an allowable de-
luct'on on the part of the person who
pays.
From the total OF all items of in.
come. there are certain deductions al
lowable by law. All interest paid on
personal Indebtedness and all taxes
paid during the year are deductiblc,
except federal income and excess prof
its taxes, Inheritance taxes and assess
ments for local improvements, such as
sidewalks. ewers. etc. Losses incur
red in business or trade are allowable.
- sxssen