Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1920-02-23
INCOME TAX FACTS
YOU SHOULD KNOW

a frequent claim for deduction is made
for loans to- relatives and friends.
Before a debt can be deducted Its
character as a true debt must be proved,
Questions such as this reach collectors ::
II | advanced q sum to assist a needy
friend or relative. having at the time
little or no reason to expect that II
would be returned, may l claim de-
ducton to cover such advance?" The
answer is No" Such an advance is
regarded as a gift, and is not held to
be bona-dde debt
A valid debt which is proved TO be
worthless is not always a proper deduc
ton. Treasury regulations provide that
worthless debts arising from unpaid
wages, salaries. rentals, aud similar
items of income will not be allowed as
n deduction unless the income such items
creditors return for the year in which
the deduction 1t sought, or in previous
year.
Where the creditor continues to extend
credit to the debtor a debt may not
be claimed IS worthless. a debt may
not be charged of and deducted In part
but must be wholly and entirely worth
less before any part may he deducted,
though il may be clearly worth less
tnan the face amount. If a debt Is for
given 1t can not be claimed as a de-
duction. because 1t is then regarded as
y gift. which is not an allowable de-
duction.
The changes wrought during 1919 by
births, deaths and marriages In many
families materially affect the liability Of
members for income tax Millions OF
babies have been added TO the family
circles, each Of whom brings an adder
exemption OF 500 on the parents in
come tax return.
On the other hand. several millions
% boys and girls became self-support-
ing and they form a new crop OF in
come tax payers. Also, the xrim reaper
brought its many SORROWS aud removed
many dependents and many OF the bread
winners themselves.
Accordingly, 4 is pointed out by in
ternal revenue officials, there are mil
lions of persons who must this year
consider their income tax liability from
new angle. For their new status as
Of Dec. 81, 1919, governs for the fun
year.
Widows and widowers who lost their
mates during 1919 are especially af
fected. They must remember that, un-
less married again before Dee. 81, they
law Similarly those who were divorced
or otherwise separated from their wives
or husbands must consider themselves
as single persons.
But a widow is not required to show
on her personal return the income OF
her husband up to the date OF his death
and the same Is true in the ease of n
widower who suffered the loss Of his
wife during 1919. For the income of
deceased persons must be considered
separately with respect to requirement
to file return for the deceased by che
executor of administrator. And the dc
ceased is entitled to exemption FOR the
fan year based upon bis status at date
VI death
The bride and groom of 1919 must
figure up the income Of each for the
full year and cons ider Il jointly with
respect TO income tax requirements. even
though they may not have been sc-
quainted during part OF the year Their
status on Dec 81 Joins them for e full
year.
The internal revenue bureau points ont
that a persons status on Dec. 81 gov
earns two things: First. the require
ment 10 file 4 return II the single indl-
vidual had a net income of 81 900 or
more. or II the married couple had n
net income of 5000 or moro: secoud,
the exemption that may he claimed on
any rciuLu Of net income.
And 1t l. emphasized that the require
Inent 10 die q return has no relation In
the personal exemption, and tAat per
son can not avoid filing a return merely
by the fact that no tax Is due.