The Dallas express. [volume] (Dallas, Tex.) 1893-1970, 1919-02-08
Facts About The Income Tax
Worth Knowing.
Continued from page y.


Il am therefore advising every
unmarried person who earned $1,000.
or over, during the year 1918, and
every married person, who together
with wife or husband, earn $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, includ-
ing overtime pay and pay bonus re-
ceived as additional compensation. A
married person having children I'M
der Is who are working should in
clude the earnings of such children.
IF sold any property at a profit,
the gain be computed and included
in gross income. If he rented any
property to other persons, the total
rents received in the year must be
ascertained, and from that figure a
deduction may be taken for taxes
paid on rented property, the neces-
sary minor repairs, fire insurance,
any interest he may have paid on
mortgage, and a reasonable allow
ance for annual wear and tear of
IiS lShlSu Inc
is included in gross income for the
year.
Interest on bank deposits, whether
withdraw or added to his band bal
ances, must be included in all cal
culations of income. Bond interest
received during the year must also
be included, except interest on NUM-
cipal, county or state bonds. In
tGrest on United States Bonds need
not be included by the ordinary bond
holder who purchased small amounts.
Holders of large amounts of Liberty
bonds, however should ask their
bankers to write to my office for the
rule applying to tax on such inter-
est.
Dividends on stock shares are in
come, and must be included in the
gross figures, although the law does
note impose the normal tax on dis
tributions made by domestic cor
porations.
"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
inventory at the beginning of the
year and the purchases of goods for
resale. From this latter sum sub
tract the inventory of goods on
hand at the years end, and the re-
suit is the cost of goods sold This
cost, plus necessary expense in
Cured 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 at his
professional income by ascertaining
the total of fees for services and
deducting therefrom all expenses con-
ducted' directly and solely with his
practice.
"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 to deduct from this
total his expenses of the year con-
nected with the planting, cultivation,
harvesting and marketing of the
crop, or the care, feeding and mark
citing 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 to be deducted from sale
price in ascertaining the grain to be
included in his return of income.
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.
1.-THE farmer is not required to in
clude in his income tax computation
o I the value of farm pro-
duce consumed by himself and family.
But in cases where he exchanges pro-
duce for merchandise, groceries, etc.,
the market value of the articles re-
ceived in exchange must be includ-
ed.
"All other items of income arising
during the year through personal SER
vice, business or trade, through use
of property or money. should be adj
ded into the gains of 1918.
Everybody wants to know what
income is exempt from tax. Very
few plums that fall to the average
man may be legally disrgareded in
figuring up the 1918 income. Gifts
and requests can be eliminated; also
proceeds of life insurance received
by the beneficiary of an insured per-
son. A person who cashed in en-
dowment 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, unless the person re-
ceived in the year payments which
represent, when added to all prior
payments on the annuity, an amount
greater than the original cost of the
annuity. Dividends of unexpired life
insurance policies are not taxable
income; but dividends or paid-u
policies must be considered income.
Alimony is not income to the recip-
lent, nor is it allowable deduction
on the part of the person who pays.
From the total of all items of in
come, there are certain deductions
allowable by law. All interest paid
on personal indebtedness and all
taxes paid during the year are de-
ductible, except Federal Income and
Excess Profits taxes. inheritance tax
eS and assessments for local i'm
provments, such as sidewalks, sewer,
etc. Losses incurred in business or
trade are allowable, also losses aris-
ing from fires, storms, shipwreck
or other casualty, or from theft, !
in cases where such losses are not
compensated for hy insurance or
otherwise. Losses incurred outside |
of a persons's regular business are
allowable to the extent of gains re-
ported from similar transactions with
in the year. Debts due to the tax