The Cordova daily times., 1919-02-03
residents will make this year thei
first income tax returns.
Must Make Sworn Statement


tax this year will reach nearly every
working man and woman, and nearly
every merchant, shopkccper and
farmer. Not all will have to pay the
tax, but nearly all will be obliged to
make a sworn statement of the years
income.
am therefore advising every un
married person who earned $1,000 OF
more 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's
his salary or wages, including over
time pay and any bonus, received as
additional compensation. A married
person having children under 10 who
are working should include the earn
ings of such children.
If he sold any property at a profit
the gain must be computed and in
cluded in gross income. If he rented
any property to other persons, the to-
ia. rents received in the year must be
ascertained, and from that figure a
deduction may be taken for taxes paid
on rented property, the necessary mi
nor repairs, fire insurance, any inter
est he may have paid on mortgage
and a reasonable allowance for annual
wear and tear of the rented property
The balance is included in gross in
come for the year
Interest on Bank Deposits
Interest on any 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withdrawn or added to his bank bal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 municipal,
county or state bonds. Interest on
United States bonds need not be in
cluded by the ordinary bondholder
who purchased small amounts. Hold
ers of large amounts of Liberty bonds,
however, 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
tons.
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 at the beginning of the year
and the purchase of goods for resale.
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.
Professional Mans Income
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 figure up all income
derived from the sale or exchange of
products during the year, whether
such produce was raised on the farm
or purchased and resold. He is al
lowed 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 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 in
come. The cost price of stock bought
prior to 1917 can not 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
clude in 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 be included.s
Other Sources Of income
All other items of income arising
during the year through personal serv-
ice, business or trade, through use of
property or money, should be added
to the gains for 1918.
Everybody wants to know what in.