The Pascagoula chronicle. (Pascagoula, Miss.) 1905-1920, 1920-03-05
FARMERS INCOME
SUBJECT TO TAX
Gains for 1919 Must Be Figured
Under U. S. Law-Returns
Due March IS.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May %
peducted-Spselal FERN for Farm
lncome-Cash Or Aeerual
Basis for Computing.

A farmer, shopkeeper. or tradesma
must figure up his net income for 1919
| and il the farm or business incem
| plus his other income was sufficient t
require an income tax return com
plete return must be filed with the col
lector of internal revenue by March Il
A farmer should ascertain the gres
income Of his farm by computing al
gains derived from the sale or ex
change of his products, whether pro
duced ON the farm or purchased ant
resold.
Farm Expenses.
From his gross income farmer |.
allowed to charge of all Of his neces
sary expenses in the conduct Of thu
farm during the year. These includ,
costs of planting, cultivatinE, harvest
ing and marketing. In addition Il
these costs he may deduct money spen1
for ordinary farm tools Of short Iifs
bought during the year, such as shov
els, rakes, etc Also, the cost Of feed
purchased for his live stock may b.
treated as an expense in SO far as this
cost represents actual outlay, but the
value of his own products fed 10 ant
mails is not deductible item.
Other farm expenses allowable are
the cost of minor repairs on buildings
(but not the dwelling housed, on fences.
wagons and farm machinery; also bills
paid for horseshoeing, stock powders,
rock salt, services of veterinary, iRsvr-
ance Except on dwelling house), case
line for operating power and sundry
other expenses which were paid for in
cash.
As to hired help, all the productive
labor is deductible expense but the
wages Of household servants, or help
hired to improve the farm, as in tree
planting, ditching, ETC., cannot be
claimed against earnings. A farmer Is
not allowed tOeclaim a salary for him.
self or members of mis- family who
work on the farm.
Wear and Tear.
Purchase of farm machinery, wag.
Ons, work animals, etc, also the cost
ings, silos, fencing, etc, should be con-
sidered additional investments In the
farm and are not proper deductions
against income.
A reasonable allowance may be
claimed for wear and tear on farm
buildings Except the farmh0use1,
fences, machinery, work animals, wag-
Ons, tanks, windmills and other farm
equipment which is used In the con-
duct Of the farm.
AS to autos and tractors, the cost of
these is not an expense, although the
cost Of their upkeep Is an allowable
deduction, If the machines are used ex-
clusively for farm purposes and not
for pleasure. Also, in such cases, a de-
duction for wear and tear is allowed.
Farm Losses.
The loss of a growing crop Is not a
proper deduction from income, mas
much as the value Of the crop had not
been taken into gross income The
loss of building or of machinery
storm, lightning, flood. etc, Is
an allowable deduction, but care should
be used to ascertain the correct loss
sustained. as restricted by income tax
regulations.
No deduction Is allowed in the case
Of loss of animals raised on the farm,
but loss is deductble from gross in
come if the animals had been pur.
chased for draft or breeding purposes.
Shrinkage in weight or value OF farm
products held for favorable market
prices cannot he deducted as loss, for
the reason that when such products
are sold the shrinkage will be reflected
In the selling price.
Sale Of Farms and Land.
The value of agricultural lands has
been Jumping during the past few
years, and during 1919 many owners
sold out part or all of their lands al |
big profits. All such gains constitute |
income and must be taken into the net |
income for the year.
Any person who sold part of farm
Or ranch, or part Of parcel Of land, |
must also show any gains realized BY
he sale
The method Of figuring gains and !
Osses on such transactions is pre-
'cribed in the Income Tax regulations,
'opies of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has
ssued an improved Form 1O4OF for
he use Of farmers. This form, to-
.ether with Form 1040A or 1910. will
rive the farmer explicit information
IS to how TO properly figure his net
ncome for 1919.
There are two methods Of figuring q
income tax return this year.
lie may make his return on the basis
f the difference between the mspey
nd goods received for his products
nd the cash paid out for actual allsw-
BILE farm expenses within the year.
)r he may make his return on the &C
rual basis, which means computin,
he receipts and expenses that pertai,
0 the taxable year, excluding iacsm
armed and expenses incurred In pre
ious or succeeding years.