The Bridgeport evening farmer., 1914-02-27
HOW FARMERS SHOULD COMPUTE
 THEIR INCOMES
Incomes Under S3,OOO Not Af- fected by Income Tax = Method of Computing Net In come Explained Returns For Last Year Must Be Made to Internal Revenue Collec- tors by March 1.

w aSnlnBIOus T 6D -1 t.----A c1 A1A AAiCA Is so fortunate as to have a net in come of over s3,000 a year in case he is a bachelor, or $4,000 if married, he is subject to the income tax, and, under the law, each individual must make return to the Internal Revenue collector of his district on or before the first day of March if he has a net income of $3,OOO or over ($2, 500 for the ten months of 191S)- While the interest of most farmers in this sub 5ect is purely Academic, the Depart ment of Agriculture has received in uuiries indicating that some wish to know just what is reduired of them under the new law.
 The income tax law of October 3. 1913. places a tax of per cent. upon all net incomes of over $3,00O, with an additional tax on incomes of $2O,0O0 or more. The first question arising in the minds of most people is what constitutes a net income For a man receiving a regular salary or a busi- ness man with good system of book keeping, it is easy to detern1lne whether or not his income IS taxable; But for the farmer who receives no stated income, and who often fails to keep accurate account of receipts and expenditures, it is more difficult to. calculate his net income
 INFORMATION FOR FARMIsRS.
 In order that farmers may be posted on the income tax as it may concsrn
 
 been furnished by the Internal Reve-s nue Bureau of the Treasury Depart Inent:
 In genera1,i an income consists of amounts derived from salaries, wages or compensation for personal service, paid in any form; also from profes- sfons, business. sales or dealings in property, or from rents, interest on bonds or mortgages, dividends on stocks or other income from invest nents These items constitute gross income, from which there should be deducted the expenses of carrying on the business, interest pa1G on indebt- ednesss worthless debts charged off; losses by fire, storm or shipwrec4x, not covered by insurance; exhaustions wear and tear of property, and any in come upon which the income tax has. already been deducted at the source, as, for instance, dividends on the stock of corporation which has al-s ready paid the tax on it's earnings.
 The provisions regarding net in comes of $3,0OO apply only to unnar- rzed persons, or to married persons not living with wife or husband A hus- band and wife living together are en- titled to am exemption of $4,00O on. their aggregate income. This means that i'm case the wife has a separate income, if this added to the husbands s income amounts to $4,00O the total Is subject to the tax; or, if the wife has no separate income. the husbands in come is taxable only in case it reaches SA,00Os But a return must be made if the aggregate income of both is $2,- 500 for the year 1913- The joint exemption, however. would be $3. .3sS-- ss
 START WITH GROSS RETURNS.
 In arriving at his net income the farmer should start with his gross in come. This would consist of any items of the kind above enumerated, and especially all receipts from the sale of products of every description from the farm. This would include all money received for produce and animals sold, and Tor the wool and hides of animals slaughtered, If the wool and hides are so1ds butt he may deduct from these items the amounts actually paid as purchase money for the animals sold or slaughtered dur ing the year. When the animals rais- ed by the owner are sold or slaughter ed. however, their value should not be deducted.
 From the gross income there should be deducted amounts of money actual ly paid as expenses for operating the farm and producing the farm pro- ducts live stock, etc This would in- c1ude hired farm labor, farm supplies purchased that are necessary to carry on the business and not an investment that represents principal, etc. Elk penses for repairs farm property may be deducted, provided the
 
 amount spent for such repairs, during g the year for which the return is made. The cost of replacing tools or machin- cry may also be deducted to the ex- tent that the cost of the new articles not exceed the value of the old No deduction may be made for the cost 1f additional farm machinery. but credit may be allowed for the annual depreciation i'm the value of such ma r11fnery. For example, if a machine rost $1o0 and is regarded good for len years of service, the annual depre- efation would be 10 per cent. and a de- auction of $1O each year could be made on this account, as part of the expense of operating the farm
 INCLUDE LIVING EXPENSES.
 The expense of supporting the fam ny. however can not be deducted from The gross income. Among items for which credit is not allowed are ex- pense for medical attendance, life ir- surance, insurance on dwelling. store accounts, family supplies, wages of do- mestic servants, and cost of board, room or house rent for family or per- roraI use In case an individual owns his residence he cannot deduct fhe estimated value of his rent But tenant operating rented form as proprietor may deduct the rent of the farm as a part of the expense of his business
 Erarners are not required to include In their income the produce taker from the farm and consumed by the family. Only produce sold off the farm is to be included farmer i: not entitled to a deduction for his owr tabor. or for expense of feeding livs stock He may, however, deduct sucf ftexns as cost of fertilizer and othel supplies and materials which are uset up in the course of his operations
 TAX FOR 1918.
 The law provides that for the yea 1918 the tax shall be computed onl! ori the net income for the ten months from March 1st to December 31st, ans that returns shall be made on the ba