The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1920-02-06
Some Information for Benefit Of This
Glass Is Given by Louis Murphy,
Collector OF
Revenue.
DEDUCTIONS ALLOWED
Expenses Of Operation Of Automobiles
Dues to Professional Societies
and Journal Subscriptions
are Allowed.

. Figuring income tax is an easy JOB
for the professional man. BY educa-
ton and training he is accustomed
to drawing up statements. he mas
records OF transactions involving III
come, and keeps well in touch with
his expenditures.
Just what he is allowed to deduct
as professional expense, in figuring
his net income, is what he wants to
know each year as the tax season
arrives. Therefore, review Of the
items in general Is given in this
article.
The present income tax law re-
uuires that returns for 1919 be filed
on or before March Is. 1920, at the
office Of the collector of internal
revenue for the district in which the
taxpayer lives. At least one-quarter
of the tax due must accompany the
return.
An unmarried person must file a
return if his or her net income was
$1,000 or over; and a married person
living with wife Cor husband) must
file if their joint net income was
1000 or over. A widow or widower,
or married person living apart
from wife Tor husband) is classed as
a single person.
The requirement to file a federal
income tax return is not contingent
upon there being a tax due.
Form 1040A is used for net income
of not more than $1,000; form 1040
for net income over $4,000. Instruc-
lions and working sheet accompany
each return form.
Eyarv firm nf nrnfASSi0naI man
operating as a corporation must make
an annual return of net income on
form 1920; if operating at a partner
ship. return on form 1905 must be
filed.
Gross Income.
| An individuals gross income from
a profession includes all compensa-
ton for his services.
/ Where services are paid for with
something other than money, the fair
market value Of the thing taken in
payment is the amount to be in
cluded as income. If the services
were rendered at stipulated price,
in the absence Of evidence to the
contrary, such price will be presumed
to be the fair value of the compen-
sation received.
In the case of a salary received,
this should be shown separately. in
block B, of the return. Many pro-
,fessional men and women-lawyers,
medical examiners, teachers, &C
countants, etc.-are officers or en-
Iployes Of a state, or political sub
division OF a state, such as city, town
or county. Their salaries or wages
as such officers or employees is
exempt from the federal income tax
The exemption also applies to fees
received by notaries' public commits
STONED by states, also the commits
sions Of receivers appointed by state
courts.
AS to fees for services to clients,
patients, ETC., these should be in
Guided In the gross income for the
taxable year in which received, I'M
less they are included when they
accrue to him in accordance with an
approved method of accounting fol-
lowed by him.
| Cash Basis.
A professional man may make his
return on the basis Of cash intake
and actual expenditures for the year.
1t should be noted here that tax
payer Is deemed to have received
income which has been credited to
or set apart for him without restIc-
ton.
A more exact and equitable method
tof figuring net income is on the "ac-
crua. basis" This means compu-
tation on the basis Of income earned
and expenses incurred, whether paid
or not, that actually pertain to the
taxable year, excluding income earn
ed and expenses incurred in previous
or succeeding years. A professional
man who keeps books of account
should make returns by this method,
If his accounting method is one gen
orally employed, and shows correct
met income.