Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-01-13
No. 4.

Numerous Inquiries have beer
received by the bucHau If inter- al
revenue 2onCernirE the items 10 hc
included under gross income in
! the 1920 income tax returns. Cor
rect understanding of the term is
of paramount Importance. to the
taxpayer, as it is the basis upon
which the return is made.
Income is defined by he reven de
act to include gains, profits, and
income derived from salaries,
wages, or personal compensation,
or from professions, vocatiOns,
trades, business, commerce, or sales
Tor dealings in property; also from
interest, rents. dividends, securi-
ties, or in the transaction of any
business carried on for gain or
profit, and income derived from
any source whatever" Practically
every dollar received by the tax
payer during The year 1920 must
be shown in his return as gross in.
come. In arriving at net income,
upon which the tax is. assessed, the
taxpayer is allowed certain sDeci-
fled deductions, such as business
expenses, losses, and depreciation,
which will be fully explained later.
Wage Farmers Tax Return.
Taxpayers may be divided into
four general classes-the wage
Garner or salaried class, business,
professional, and agricultural. ANY
form of compensation for personal
services rendered by the wage earn
er is income, including salaries,
wages, commissions, fees, and
bonuses, pensions paid retired en-
ployes. and tips. Payment for per-
sonal services may be paid for
partly in cash and partly in board
and lodging. In this event fair
value must be placed on the room
and meals, and the amount report
ed as income.
Promissory notes received in pay
ment for services, and not merely
as security for such payments, con-
stitute income to the amount OF
their fair market value. When
services are paid for in something
other than money, the fair market
value of the thing taken in pay
ment Is the amount to be included
as income.
If the services We're rendered at
n stipulated price, in the absence
Of evidence to the contrary, such
price will be presumed to be the
fair value of the compensation re-
ceived. Compensation credited to
a Taxpayers account and subject to
must be reported as in
come whether actually received or
not
The gross income of the usual |
business consists of the gross profit |
On sales, together with income from |
other sources. The return must |
show the gross sales. purchases |
and cost of goods sold. To reflect |
net income correctly and to ascer- /
ain gross income inventories are |
necessary at the beginning and end |
If each taxable year.
The lawyer, doctor, architect, |
lctor, author, dentist, clergyman,
md other professional man must |
include in his return of gross in
come all fees, salaries, and other |
for professional serv-
ces.
Returns BY Farmers.
The farmer is required to report
Is gross income all profits derived
rom the sale or exchange of farm
products, including crops and live~l
stock, whether produced on the
arm or purchased and resold.
Where farm produce is exchanged
or groceries, merchandise or other
trticles the fair market value of
he article must be reported as in
,ome. A farmer who rents his
arm on the crop-share basis must
eport such income for the year in
which the crops are sold. Profit
derived from the sale or rental of
arm lands must be reported.
Within the meaning of the rev.
niue act the term farm" includes
stock, dairy, poultry, fruit, and