The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1918-02-27
INCOME TAX RULING.
DECISION RELATIVE TO RETURNS
& BY FARMERS FOR INDI-
vIDUAI INCOMES.
Tho Ruling Win bc OF Special Inter-
cst to TURNER'S Who Arc Holding
Last Years Cotton Crop.

tive to their returns for individual
federal income taxes. Collector ID. c.
Heyward yesterday stated that there
had been considerable inquiry from
farmers who had held their crops
over one year to another as to how
to proceed In making their returns
Mr.. Heyward stated that he realized
fully that there would be some diff
Guilty about the matter but that those
B who held their cotton into another
year would be compelled to keep at
least fairly accurate account of the
expense OF producing the crop. He
referred to treasury decision 2153
which dealt exclusively with the re-
turns of farmers and stated that GER
tain extracts from this decision would
be Of very great benefit to farmers
throughout South Carolina in making
their income tax returns:
The term farm az herein used
embraces the farm In the ordinary ac
ceptcd sense. plantations. ranches.
stock farms. dairy farms. poultry
farms. fruit farms. truck farms, and
AL lands used for similar purposes;
and for the purposes OF this decision
all persons who cultivate. operate or
manage farms for gain or profit.
either as owners or tenants, are des-
Ignated as farmers
"All grains. profits. and income de.
rived from the sale or exchange of
farm products. whether produced on
the farm or purchased and resoid by
farmer. shall be included in the re-
turn OF income for the year in which
tho products were actually marketed
and sold; and all allowable deduc-
ttons. including the legitimate ex-
penses incident to the production of
that year or future years. may be
claimed in the return of income for
the tax year in which the right to such
deductions shall arise. although the
products to which such expenses and
deductions are incidental may not
have been sold or exchanged for mon
ey. or money equivalent, during the
year for which the return is rendered
"Rents received in crop shares shall
: likewise be returned as OF the year
which the crop shares are reduced
honey. or a money equivalent. and
wable deductions. likewise, shall
be claimed in the return OF income
for the tax year to which they apply,
although expenses and deductions
may be incident to products which
remained unsold at the end of the
year for which the deductions are
claimed. When farm products are
HI for favorable market prices,
no deduction on account of shrinkage
I'm weight or physical value, or losses
by reason for such shrinkage or de-
terioration In storage. shall be allow
ed.
Cost OF stock purchased for re-
sale is an allowable deduction under
the item of expense. but money ex-
pended for stock for broodlng pur.
poses is regarded as capital invested
and amounts SO expended do not con
stitue allowable deductions except Us
hereinafter stated.
"where stock has been, purchased
for any purpose, and afterwards
dies from disease or injury, or is kill
ed by order OF the authorities OF
State or the United States and the
cost thereof has not been claimed as
an item OF expense. the actual pur-
chase price OF such stock. less any de-
probation which may have been pre-
viOusly claimed. may be deducted as
loss. Property destroyed by Or
der OF the authorities OF a State or
the United States may, in like man
ner, be claimed as a loss: but If re-
endorsement is made by "a state or the
United States. In whole or I'm part. on
account OF stock killed or property
destroyed, the amount received shall
be reported as income for the year
In which reimbursement is made.
'"Thc cost of farm machinery Is
not an allowable deduction as an item
Of expense. but the cost OF ordinary
tools may be included under this
item.
Under the sixth deduction enumer-
ated i'm paragraph B. providing for "a
reasonable allowance for the exhaus-
tion, wear, and tear of property aris-
ing out OF it's use or employment o.
there may be claimed reasonable
allowance for depreciation on farm
buildings Cothcr than a dwelling oc-
u.