Richmond daily register. (Richmond, Madison County, Ky.) 1917-1978, 1921-02-10
INCOME TAX Law
FOR THE PEOPLE

Furnished by the Richmond
FDaily Register to its patrons ant
information obtained from K. {
Oldham.)
Note-This information is no
to teach an individual how tt
make out return to the govern
ment, but to give him such help
full and necessary information as
will assist him in making ready tc
have his return prepared.
. Suppose a single man supports
a II year old brother at a boarding
school or at home, is there any diff
ference in exemption allowed him ?
Suppose he also supports 20 year
old sister who lives with an uncle at
the brothers. home?
A He is entitled to 5000 eXemp-
ton for the brother but not for the
sister,, as she is over Is years old and
not an Incapable person.
Q-What effect on that would these
changes make: His mother and
younger sister on June Is took up
their residence with an uncle but he is
still their chief support and still the
sole support of the brother at school
and the older sister at college, both
brother and sister regarding his home
as their home; or suppose that he is
not the chief support of his mother
and sister; OF suppose that the older
sister is supported by and lives with
him viii . the mother, younger sister
and brother maintain a separate
home, h. still being their sole sup
port?
A-As his brother and older sister
are members of his household, he is
entitled rs the head of Il family to
$4,000 exemption plus 5000 additional
for each Of his three dependents; still
the head of the family with but one
dependent. the brother; his support of
and residence with older sister makes
him the head of family, exemption.
$1,000 plus 5000 for each of three de
pendentS. but not for the older sister.
GA mans mother has an indie
pendent income and supported three
other children in her own home while
the man contributes the greater part
of the living expenses of an invalid
soldier, not related to him and not liv-
ing with him.
A-The man is entitled to eXemp-
ton of 500 only, for the actual de-
pendent not capable of self-support.
GA married man lives with his
wife, received during 1920 n salary Of
$4,000 which was his total net income.
What is m tax?
A-Net income less personal ex-
emptiOn l. 4 per cent OF 81 900 OF
$160, plus l per cent surtax on 81 900
which is SO.
Q-Suppose this same man received
in addition: (a) dividends of $500
from a home corporation; tb) divi-
dends of $500 from a foreign corpor-
alton, out IF earnings derived from
the United States; (c) dividends of
5000 from Z foreign corporation de-
rived from t foreign source?
A-(a) 500 dividend not subject
to normal tax, surtaX at rate of 2 per
cent increasing tax by $40; (b) $500
dividend not subject to normal tax,
surtaX at rate Of 2 per cent increases
the tax Sc; (c) 5000 dividend is sub
ject to both normal and sultax.
OFF a dividend of $500 has been
paid $3.50 in cash and $3.50 in stock
of the corporation, what would be the
RESULT .
A--The $3.50 stock dividend is not
subject to tax according to a late rul-
ing of the Supreme Court of the Unit
ed States.
eff the dividend of $500 has been
paid half cash and the remainder in
stock of another corporation, what
| the result?
A-The $3.50 dividend is then in
come to the amount of its fair market
value.
GA single man is paid salary
! from January 1 to June 80, 1920, at
the rate Of $4,000 per year; during
| the balance Of the year at the rate of
| $4,000 Year. He received a divi-
| dend of $500 from local corpora
| ton and $500 dividends from a for
eign corporation out of foreign earn
| ings. He paid tax of $40 on the
$500 dividend to foreign country.
What is his ia H?
| A-Salary Ind dividends amount to
$14, 400 net in come. He is entitled
to credit for formal tax of 81 900 for
personal exemp tion and 81 500 domes-
tic dividend. He has 81 900 taxable
at 4 per cent; he has 81 900 taxable at
| O.