Arizona republican., 1922-02-02
Income Tax Facts
You Should Know
Series of Fifteen Articles Prepared
by the Bureau of Internal
Revenue of informative
Value to Millions.
No. 8.

the revenue act OF 1921 is that every
person whose gross income for l9Zl
was $4,000 or over shall file return,
regardless of the amount of net in
come. If a husband and wife living
together have an aggregate gross IN
come Of $4,000 or over, separate re-
turns or a Joint return may be filed.
Regardless of the amount of gross
income. returns are required of every
married person living with husband
or wife whose net income for 1921
was $4,000 or over, and Of every
single person. or married person not
living with husband or wife, whose
net income was $1,000 or over met
income" upon which the tax is as
sessed. is gross income" less GER
tain specified deductions. Gross in
come includes gains. profits. and
income derived from salaries, wages,
or compensation for personal serv-
ice, of whatever kind and in what
ever form paid, or from professions,
vocations. trades, businesses, COM
merce, or sales, or dealings in prop
erty, whether real or personal. grow
ing out of the ownership or use of
or interest in such property; also
from interest, rent. dividends, Sc
curities, or the transaction of any
business carried on for gain or profit,
or gains or profits and income de-
rived from any source whatever"
Taxpayers may be divided into
four general classes-the wage Garner
or salaried class. business, profess
sionaI and agricultural. Any form of
compensation for personal service
rendered by the wage Garner is in
come including salaries, wages, COM
missions, fees, pensions paid retired
employees and tips. All must be in
cluded in gross income If payment
for personal services is made partly
In cash and partly in board and
lodging a fair value must be placed
on the room and meals, and the am
cunt included as income.
The gross income of the usual busi-
ness consists of the gross profits 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, inventories are necessary at
the beginning and end of each tax
able year.
The lawyer, doctor. architect, au-
thor, dentist, clergyman must in
clude in his return of gross income
all fees. salaries. and like compen-
sation for professional service.
Exemption Allowed Clergymen
Certain items are specifically ex-
empt from income tax. In addition
to the items exempted by the revenue
act of 1918, such as proceeds of life
insurance policies, amounts received
through accident or health insurance,
value OF property acquired by gift or
devise interest on State and certain
Federal bonds, etc. the revenue act
OF 1921 provides that the rental value
OF a dwelling and its appurtenances
Il h &c
exempt from income tax, and need
not be included in the return.
The exemption of $4,000 formerly
allowed persons in active military or
naval service of the United States is
repealed Amounts received under
the war risk insurance and vocational
rehabilitation acts or from war pen
sions of the United States are ex-
empt, and need not be included in the
return. hea9
The farmer is required to report as
gross income all receipts derived
from the sale or exchange Of farm
products, including crops and live
stock whether produced on the farm
or purchased and resold. Where farm
produce is exchanged for groceries,
merchandise, or other articles the
fair market value of the articles re-
ceived must be reported as income.
A farmer who rents his farm on the
crop share basis must report such
income for the year in which the
crops are sold. Profit derived from
the sale or rental Of farm lands must
be reported.
Items to Be Included
Every taxpayer is required TO in
clude in his return of gross income
the following items:
Interest received on notes and de-
posits in banks, including savings
| banks.
Cash dividend on stock. The Su-
| prerne Court decided in March. 1920,
| that stock dividends are not taxable.
| Profits from the sale OF such stock,
! however, are taxable income for the
| year in which received. Ony divi-
| dends paid out of earnings or profits
! accrued since March l, 1913, are
| taxed.
Profits received from the sale Of
property, real, personal, or mixed.
| The basis for ascertaining gain de-
rived from the sale or disposition of
/ such property acquired after March
| 1, 1913, is cost The basis of ascer
! tanning the gain derived from the
sale or other disposition of such prop
erty acquired before March l, 1913,
is likewise cost, but
1 II Its talr market price or Ndlue
as of March ], 1913, was in excess of
cost, the gain is the excess of the
amount realized over such fair mar
/ ket price or value. For example. A
purchased a house in 1910 for $4,000;
it's fair market value on March I,
1913, was $4,000 and he sold in. 1921
for $4,000. The amount TO be re-
| ported as gross income is the diff
ference between $4,000 and $4,000,
or $4,000.
If the amount realized therefor is
more than cost but not more than its
fair market value as of March l,
1913 no gain shall be included in
gross income. For instance, il A, in
the above example. had sold in 1921
| for $4,000, no taxable gain would
have resulted.
If the amount realized therefor is
less than cost but more than March
/, 1913, value, there is no gain. For
example, if A purchased house in
1910 for $4,000 and its fair market
value as of March /, 1913, was $4,000
and he sold In 1921 for $1,000, no gain
would have resulted.
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Bronzed Aluminium coins are be-
| ing issued in France to replace pa