Decatur Daily Democrat, Volume 23, Number 19, Decatur, Adams County, 22 January 1925 — Page 2

r INCOME TAX DEPARTMENT —By— M. L. SEIDMAN.C. P.A. tn the previous article the normal tux ami the surtax were explained. We there found that the normal tax and surtax represent the total tax payable except for a credit permitted for so-called “earned Income," und the conalderatlon of what is known as "capital gains and losses. ( In this article, the earned Income credit will be discussed, and in the next article, the question of capital gains and losses. The provision giving special con-, siderution to earned income appears i this year for the first time in our Income tax laws. Its name makes its purpose half-explanatory. It seeks to Impose a smaller tax on income derived from the sweat of the brow than on income derived from dipping coupons. While the purpose is noble, the credit that is allowed for earned in-] come is at best nominal. Before going into this phase, however, let us first see what Is meant by "earned Income." The law defines it as the , Income derived from personal ser-1 vices rendered. It therefore includes wages, salaries, professional fees. etc. ! The man who Is engaged in business I on his own account, can consider .as his earned income a reasonable al- j lowance for salary. However, this amount cannot exceed SO% of his share of the profits of the business. The effect of the earned income credit as a means of reducing the tax, however, is greatly restricted, for the law says that in no case can the amount of earned income be regarded as more than SIO,OOO. But this does not mean that a person is not allowed a larger salary than SIO,OOO. It only means that for the purpose of computing the earned income credit, not more than SIO,OOO can be considered as earned income. On the other hand, the law also says that everyone has the right to consider at least $5,000 of his in ; come as earned income, whether or not it is in fact earned income. In otller words, if the income of tin individual were SIO,OOO. and all of it came from interest on bonds, or profits on stocks, while there would be no earned indomc in fact, that in- 1 dividual would be able to compute his tax as if $5,000 of his income were earned income. Now let us sec just how this earned income credit works out. We already know how to compute the normal tax and the surtax. The law quaivWes that the total so arrived at shaft be credited with 25% of the tax that would be payable if all of the in-' dividual s income were only his earncd income. An actual case will perhaps serve! Io clarify the principle. Iset us as-. sumo that a married man with no dependents has a net for the year 1921 of SIO,OOO, of which $6,500 is from salaries, and $3,500 from profits on slocks. In other words, his earned income is $6,500, and his total Income SIO,OOO. The tax would first bi- computed in the regular way, on his total income. His total Income being slo.'|foo. he would deduct his exemption of $2,500. leaving $7,. 500 subject to tax. The normal tax would be 2% mi the first $4,000, or SSO; ami 4% on the remaining $.'1,500. or $l4O, making a total norm il tax of $220. Since his total income was only $10,(100, there would be no Hur-1 taxes, so that his total tax would be I $220 before the credit for the earned income. Here is the way the earned income credit would b.- computed: You recompute the tax on the basis as if 1 the earned income were his only income. In other words, you assume J in the ease supposed, that the $6,500 ’ earned income constituted all the net 1 income of the taxpayer, and compute ' the tax on that basis. w c therefore! 1 start with $6,500; deducting the ex- ' eruption of $2,500. which leaves sl,. 000 subject to tax. This is all t„ x . " able at 2%. or SBO. We thus srsthat if the earned income were the entire imotnc of the taxpaver, his tax would be SBO. Now the earned in come credit can be thekn. This is 25% of this SBO, or S2O. We now go Io the tax that V.-is first com puled in the ordinary way. ol s22<i . dodm-t from' ii in,, "■■•dit of S2O. Which leaves l|„. tar to be paid of s2'io. Because trf the wanner prescribed ' for the computation of the earned In come credit, and the SIO,OOO maxi- ‘ iiutiu limitation on the amount that cau be considered as earned income. H 1a apparent (Hat the reduction in ' tax thru it cau not. be very -large. As " a matter of fact, the credit can not ’ ordinarily-be more than $75 at beat, f or let us assume that the earned in come of the taxpayer amounted to ! SIO,OOO, the maximum. Let ns assume that the taxpayer is single, with no* . dependents. : u as. to deduct, the smallest eietopttMi. or $1 000 lifts leaves ,s3,ody subject to tax, the first $4,000

being taxed at 2%. or SBO, the next J $4,000 at 4%, or $l6O, and the r«-]l malning SI,OOO at «%, or S6O, mak-'fl ing a total tax of S3OO. 25% of which | is $75. I i There Is a further limitation that I ! might be pointed out, and that Is I that in no event can the earned In- I come credit exceed 25% of the tax I computed in the ordinary manner.'■ This limitation most usually applies ■ in those cases where the entire net ■ income Is less than $5,000. In such ■ cases, the simplest way of computing I the tax is to first compute it in theji 'ordinary manner, and then deduct ,■ one-quarter of the tax so arrived at, II for the earned Income credit, the dis- I I ference representing the next tax. I ! payable by the taxpayer. I It is obvious that from its nature I and purpose the earned income pro-j fl vision is only applicable to Individ- I uals, for it has as its background theil element of personal service. Corpor- I atlons. therefore, cannot take any aljl lowance for an earned income credit. 1 1 | In the next article, as has been|| earlier mentioned, the subject ot|« ] capital gains and losses will be ll s ' I cussed. | o — || SCIATIC NEURITIS 1 The sciatic nerve situated at the 1 back of the hip joint is frequently the 1 subject of Neuritis, giving rise to the 1 painful disease Sciatic. The sym-J ptoms are intense pain which shoots 1 down the thigh to theh foot, often ag- II gravated by walking, and with paln-|| ful points along the course of theil nerve, very tender to the touch. I The disease is a very obstinate one J and does not readily respond to ordin- | ary treatment. H takes more than 'I the usual pain sedative even to alle-rl tive the pain. I The quickest, safest and surest I way to get rid of the persistent nerve 1 racking pains of Neuritis to get a I bottle of Allenrhtt Special Formula I No. 2. which comes is capsule form. I Take them as directed and notice fl how in about 24 hours they have con- I siderably reduced, if not entirely 1 banished, all pain and soreness. ■ Continue until the Neuritis has en- I thely disappeared and you are able to I work and rest in comfort once again. 1 Holthouse Drug Co. keeps this Spe- 1 cial Formula No. 2 in stock all the fl time and sells lots of it. fl I 1 Adventists Deny Setting Date For End Os World I Washington, I). Jan. 22.—1 n view 1 of the approaching date of February | 6, set by some for the end of thej] world, the executive committee ofij the Seventh-day Adventist denomin-'l i ation at their headquarters in this'l I city have put on record the follow- I ling repudiation; 'I Whereas, A group of people having I Ino connection with the Seventh-day I I Adventist church have assumed the a name of this organization, and have fl set a date for Christ’s second advent. I announcing February 6, 1925, as the I time for this event, we hereby place I officially on record in the minutes of 9 our General Conference our repu- fl d ation of all time-setting, and record ■ our protest against connecting the 9 name "Seventh-day Adventist" with 9 this propaganda. Anew we declare 3 to the public that througliout our his- [J tory our witness to the signs of the ■ times that show Christ’s second com- fl ing near at hand, has ever been based fl on the Scriptural teaching that "of fl that day and hour kuowetli no m in." ■ Tells Os Huge Profits ' Made By Bootleggers | Philadelphia, Jan. 22.—Bootleggers fl have made a profit of more than « $160J)00.00() in this area. Major Wil- fl Ham G. Murdock, prohibition enforce-]■ -inent director of Pennsylvania, told ■ the Anti-Saloon league's annual meet-M ing here. Murdock warned the league Isl that if the bootleggers arc not crush- ■ ed with n the next year, their oper-tfl al ions may never be stopped ■ J

DANCING I] Billy’s Syncopator’s I’riday night at Masonic Hall introducing that new fox trot f ! “Doo-Waeka Poo" Park Plan I'ub!’' I**

DECATUR DAILY DEMOCRAT, THURSDAY, JANUARY 22, 1925

I REMOVAL SALEj | SATURDAY IS THE LAST DAY OF THIS GREAT | MONEY SAVING SALE I " WBSITH gold wreath LADIES FIBER SILK HOSE _ . r, KTZVIAUCJ SPECIAL DINNER PLATES CUPS AM) SA ( E " Mercerized Clock Sale Price I 17c 98c 39c palr I SN AP I ASI ENERS. cotSATFS maiiOganv I HOOKS AND EYES SHAVING CREAM CANDLE STICKS L 5c values 1 lc 3 ' 110 c 49cvl - H - AUTO NAME PLATES elbctric ■ TABLE LAMPS SUGAR AM) CREAMERS 10c value value va ' ue 11 • ' 2 5C each e OO complete | each h - hwm— SCHOOL TABLETS CLOSING OUT OF DISHES KOSE ’’ATTERN I 60 Shcc(s IN THE ROSE pattern nTp g ANI) SAU cers ■ I 25c Dinner Plates 19c QQz» 4 C Each < Q .... </OC- set of six 21c Soup Plates !£-T-IJMIT .’.il. 11.1 Hi" l iwrc:r~ I.'.::.'n.'.ir •jr.~T' ~ '• • WtH""’ 1 1 ; (;L \SSW \RE 19c Brcad and BuUeTB - - 12 c PLAIN WHITE , (1 v . '‘ ic ' ,|ates ' !? CUI’S AND SAUCERS . 19c Values 3,'lc Bowls 24c K««’ls 19c Ot/C I 25c Oatmeal Dishes 15c t)UC set of six AIR FLOAT O. N. T. WATER TUMBLERS TALCUM POWDER CROCHET COTTON lOc vahle 10c value I 2 'sc 5c 5c ban I ARGH No. 3 LAMP C HIMNEYS WRITING TABLEI’S GLASS DISHES ' and LANTERN (iLOBES 1A each A lOc tach 9C each m EXTRA LARGE COLATE’S AND MENNEN’S MENS TURKISH TOWELS TALCUM POWDER 25c value MERCERIZED HOSE I 58c Value . | i 44C Cach 19C can 19Cpair I LADIES HANDKERCHIEFS , owl brand degorated and plain white 10c anti 15c Values TOILE ! PAPER I PAPER NAPKINS I I I ' 8c - 3 ”'" 23c 4c— 1 | Y Alt N p INT TJN fVJ , s ALL KINDS I A( ORN BRAND ( HEWING GUM I 3 2 27c 4c each I 10c I MOMS 5 $ 10 STORE WATCH THIS SPACE FOR > OPENING SALE ANNOUNCEMENT Sa , . ,