The Denison review. [volume] (Denison, Iowa) 1867-current, 1920-06-30

Was tax frse. To eliminate all articles
| raised froit1 the opening inventory i'm
poses whit is Virtually d capital Tux
| bh all that pdftitil raised during tho
years Which the ii1C6rhe OF the tan pay.
err was tax free ;ilid Is contrary to both
the letter and spirit Of the law.
In an effort to avoid confusion and
the making of amended and other com
plicated reports for previous years,
which in some cases will be practically
impossible for the taxpayer to furnish,
your committee offered three sugges.
ti0ns as follows!
|. by Including III the opening in.
vcntofy (aD Oily such products as were
on hand at the beginning Of the pre-:
vious year, and CD such as were pur-
chased during such previous year and
for which no deduction had been
claimed
:. BY fling amended reports for
1Dl7- and succeeding years and com
putting the tax at the rate IMPOSED Tor
the RESPECTIVE years.
8. (a) BY paying tax on inventory
basis with all items included in the
opening inventory and (b) by paying an
additional or separate tax beginning at
the minimum rate on an amount re-
presenting this difference between the
opening Inventory aid The cost Of all
items inclided therein not previously
deducted for lnconie tax PURPOSES; pro
vidcd however; that the additional or
separate tax so paid in adjustment Is
not less than the additional tax to lie
paid under suggested method No. 2
above.
Ask Time to Consider Plan.
These are approximately correct,
neither of which, however, was &C.
Cepted by the department for that rea'
son. they stating thnt at this time they
could not approve any System that
would not assure absolute accuracy
without u change iii the present law.
The committee also ask ed the board
of appeal and reviews If they could
suggest some simple method Of making
the change and this board In turn said
that this same matter had been brought
to their attention but that they had
been unable to solve it.
The committee also asked that there
is a mutual understanding that will at
some time lead to practical and
equitable method of changing from the
cash basis" to inventory system which
will eliminate so much diSSeniOn and
criticism. The committee welcomes any
suggestions or merit.
Tho board Of appeal and reviews
agrees to change the present ruling and
to allow the taxpayer to produce back
inventories in order to make adjust
ments and change from cash to inven
tory which we acknowledged was fait
but which in fact, cannot be used in
all cases as the figures are not obtain
able.
Accounting Methods.
The accounting methods of the
farmer do differ from that of other
businesses for this reason, that the &C
countant demands cost and a dcprecia
ton on capital assets. But since from
the beginning of agriculture in this
country farmers have buildings, fences
and drains. as their capital assets in
the strictcst sense of the word and al
/ other personal property as having 4
quick tangible value which we will
| call market value, less cost of market
| ing as their stock in trade. they wish
to include in their inventories all OF
those items including stock of all kinds
grains of all kinds, and machinery uset
| in the business.
This method clearly reflects the &c
tual income or profit and possesses tho
! merit of being absolutely fair to bOtl
the taxpayer and the department.
The board of appeal and reviews
holds that if the farmer will establish
4 system of accounting and bOOkkccp
| ing practical for his business that the!
will be willing to recognize that system
as an equitable system or reporting.
System Near Completion.
This sytem of accounting has beer
practically completed by us in con
junction with the department of agri
culture and will be filed with the treas
ury department for it's approval.
This cpn1nittnp fools that thp do
partment has boon fair with them anc
although some few things are yet tc
be worked out. that both sides arc en-
deaVOrinG to reach a fair and equitable
adjustment whereby we may pay our
tax on our profits as they accrue.
The fact that the law is new to this
country is the reason for different in
terpretatiOns of its application. 1t var
les in each state and with the local
revenue collectors. The department
gave us to understand that this was
would be made to make it as uniform
and equitable as possible.
This committee recommends that rs
many change from cash to the lnven
story system as can do so without be
ing required to pay on any amounts
which were tax free when earned. as
the inventory method seems to be the
only equitable and satisfactory method
of arriving at income for purposes OF
taxation. Tho farm accounting book
has been made with this thought in
view~and to conform to a system which
could be recognized by the department
as accurately rCfleCting the actual pro
fit Of any taxable year.
-[Fl-
DR.. G. G.. GoOrgCSOn, agronomist in
charge of the government experiment
stations in Alaska. and NJ. ID. Snod.
grass, who has charge of the station at
FairbankA Alaska, recently visited ut
Hollandale Farm, near Bloomfield, and
selected six milking ShOrthorns to be
sent to the stations at Fairbanks and
katanuska. They also took two HamD-
shire hogs from the Wickiield farm. Mr.
SnodgraSs expects to arrive at Fair
banks early in August. The stock will
he shipped to Seattle by rail- from there
they will go by boat and then be driv-
en- about 400 miles.