HARDWOOD RECORD 



35 



atioii sliall witlilioM fiuiii tlii' .in i.li'inls i)ui(l tin- iiuuiiie tax of 

 one per t-eiit on behalf of^ the stoek holders. Such is not the 

 theory of the law, and the i-oni"pany will pay the full amount of 

 the dividend without withholdinfr anything therefrom. 



One other thing may be of interest. The definition of {;ross 

 im-ome of a mercantile corporation from which the dediutions 

 allowable are to be made, is as follows: 



From the sum of the gross sales during the year plus the sum 

 of the inventory at the eml of the year, deduct the sum of the 

 inventory at the beginning of the year plus the cost of goods 

 and materials purchased during the year. To this ditference add 

 the income receiveil from any other source (such as rentals, in- 

 terest, etc.) anil the result will constitute the gross income for 

 the year. 



Third — As to individuals. Who is to make a return under the 

 lawf Every citizen of the Uniteil States, whether residing at 

 home or abroad, and every person residing in the United States 

 though not a citizen thereof, having a net income of $:!,00l) or 

 over for the taxable year. This settles two \ cry iiiijiortant 

 matters. 



(a) Tf one's gross income Is over .$3,000 but the deductions 

 allowed by law brings the net to less than $3,000 no return is 

 necessary. 



(b) If one's net income is over $3,000, though less than 

 $4,000, a return inust be made even though the ]party may lie a 

 married man residing with his I'amily and tlius entitled to a 

 $4,000 exemption. 



Please bear in mind, however, that the return made for this 

 year is for the ten months of 1913, beginning March 1, and the 

 general provisos of the law are changed corresjiondingly, i. e., 

 the exemption allowed is only five-sixths of that allowed for a 

 full year. The duty of making a return ajiplies to all having a 

 net income of $2,500 for those ten montlis. 



What constitutes net income within the meaning of the law? 



(a) In figuring gross income there should be excluded in- 

 terest received from the bonds of the United States or any states, 

 or any political sulidivision thereof. Such income is absolutely 

 excluded and need not be referred to in any way in your return. 

 You do not set it down and deduct it from your gross income. 

 It has no place whatever in your return. 



I should stop here to say that this is not true in the case of a 

 corporation. It must pay the one per cent tax on its entire net 

 income no matter from what source derived. 



(b) In figuring gross income there will be included: 



1. .\ll salaries, wages or compensation of any kind received. 

 -. Total amount derive<l from business, traile, commerce, sales 

 or dealings in property. 3. Amount derived from rents and in 

 terest. 4. Amount derived from any partnership to which you 

 belong whether distributed or not. o. Any other income, gains 

 or profits not included in these. 0. In a separate item you will 

 be required to set out all dividends received. 



(c) In iletcrmining the net income there will lie clcductccl: 

 1. The expenses actually paid in doing business but not inchul 

 ing personal, living or family expenses. 2. .\11 intcn-sr ]i;u<\ 

 within the year on personal indebtedness. 3. .\ll taxes paid 

 wilhin the year. 4. Losses actually sustained during the year 

 in trade or arising through fire, etc, not compensatc<l by iusur- 

 rime. .5. Bad debts actually ascertained to be worthless, (i. 

 Reasonable depreciation. 



After making these deductions you will have a tentatixe net 

 income; but there yet remain other deductions for which appro- 

 priate columns are provided on the blanks in whiih you will 

 set down your income for which the tax has been withheld at 

 the source, anri your income derived from diviilcmls. All these 

 items are to be deducteil for the purpose of determining your 

 net income for the purpose of the ](ayment of the normal tax 

 of one per cent which is imposed on incomes of $20,000, or under. 

 This net income having thus been determined you will take your 

 exemption of $3,000, if you are an unmarried man and $4,000 

 if married anrl living with your wife. .\nd on the b.nlance the 

 tax of one per cent will be comiiutcil. 



I am nut going to take the time now to iliscuss the super tax 

 which is impo.sed on incomes above $20,000. If any of you are 

 unfortunate enough to belong to that class, then you can hire 

 a lawyer to help you out. 



All returns must be file<l with the internal revenue otlicc for 

 the district in which you have your principal place of business 

 on or before March 1. On or before .lune 1 you will receive 

 notice from the government of the amount of your tax, and this 

 must be jiaid not later than .July 1. Seven penalties are provided 

 for the failure to make returns, or for making false returns, etc. 

 — and we all know that Uncle Sam means business, so we will 

 try not to give him the opportunity to enforce any of these 

 penalties. 



I will take time to state only a few special points which may 

 be of especial interest, as affecting the ordinary business man. 



( 1 I The tax is computed on all gains, profits or income. This, 

 howc\cr, docs not include anything you receive by way of gift, 

 or any insurance money collected. It does include any gain in 

 \alues if the same is actually realized by sale, or is taken up on 

 your books as an increase of assets. It would not iuclmle an 

 estimated advance in value of real estate not taken up on the 

 books. 



The reverse of the same rule woubl apply to losses and dc 

 preciations — actual or estimated. 



(2) When husband and wife live together they will be allowed 

 Jointly a total exemption of $4,000, on their aggregate income. 

 They may make a .joint return, both subscribing thereto, or if 

 they have separate incomes they may make separate returns; 

 but in no case can they jointly claim more than .$4,000 exemption 

 on their aggregate income. 



(3; When an individual by reason of minority, sickness or 

 other disability, or absence from the United States, is unable to 

 make his return, it may be made for him by his duly authorized 

 representative. On proper excuse shown, such as absence or sick- 

 ness, the collector on applic.ntion and cause shown, may grant 

 an extension of thirty days. 



(4) While the gross income for the various classes or groups 

 referred to must be set out, the particular items going to make 

 up that group need not be set out. For instance — If any one 

 draws two or inore salaries in different capacities, he must set 

 out the total salaries received without enumerating. Likewise 

 as to dividends received — interest received — jjrofits on business 

 made. The law does not contemplate that a man .shall set out 

 the jiarticular details as to his income except by grou]>s. 



Small Portable Mills on Large Operations 



A large coal company in Kentucky has solveil in a very satis- 

 factory manner the problem of utilizing much of its slash left 

 after lumbering operations and at the same time cheapeuing the 

 cost of its mine timbers. Small portable sawmills with 8-foot 

 <-arriages, such as are often emjdoyed in tie cutting, follow the 

 logging and cut up the tops and larger limbs into mine timbers. 

 The total weight of the plant cxilusivc of the 20-horsepower 

 boiler is about 3.")ii(i jiouikIs. It is rp:idily dismantleil and hauled 

 from place to place on wagons. .-Vt least four weeks' supply of 

 material is re(|uired for each set-up. A crew of four men is 

 required to operate each mill. The saving in cost over the con- 

 tract method formerly used is very nmrked, while the utilization 

 is much more thorough. 



It has been suggested that in sections of the country where 

 logs are brought from the woods to the mill by rail the installation 

 of small portable sawmill plants on flat cars which can be taken 

 to the forest and there used for sawing very crooked logs and 

 knotty tops into material suitable for novelty and similar work, 

 the coarse material and very crooked and broken logs can be 

 cut up into short lengths anil stacked along the railroad track 

 after the regular logging crew has removed the more valuable 

 material. The small mill can then be hauled alongside the stacks, 

 the logs elevated by power onto the car and sawed into narrow- 

 widths and short lengths, much of it choice stock. 



