Okolona messenger. (Okolona, Miss.) 1900-current, 1920-04-01
Gains for 1919 Must Be Figured
Under U. S. Law-Returns
Due March IS. .
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be
oeducted-Speclal Form for Farm
lncome-cash or AecruaI
Basis for Computing.

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Plus his other income was sufficient to
Eequire an income tax return a com
niete return must be filed with the col
Rector OF internal revenue by March IS.
A. farmer should ascertain the gross
income Of his farm by computing all
gains derived from the sale or ex-
slange Of his products, whether pro
dueed Oh the farm or purchased and
resold.
Farm Expenses.
From his gross income a farmer is
allowed to charge of all of his neces-
saFy expenses in the conduct of the
Earn during the year. These include
sosts of planting, cutivating, harvest.
ing and marketing. In addition to
uflese costs he may deduct money spent
for ordinary farm tools Of short life
Bought during the year. such as SHOW
els, raEes, etc. Also, the cost of feed
purchased for his live stock may be
treated as an expense In so far as this
cost represents actual outlay, but the
value of his own products fed to ami
mails is not deductible item.
Other farm expenses allowable are
the cost of minor repairs on buildings
ebut not the dwelling house), on fences,
wagons and farm machinery f.; also bills
paid for horseshoeing, stock powders,
rock salt, services of veterinary, insur-
ance Except on dwelling house,, gaso-
Ene for operating power and sundry
ether expenses which were paid for in
sash.
AS to hired help, all the productive
Abor is a deductibe expense; but the
wages of household servants, or help
hired to improve the farm, as in tree
planting, ditching, etc, cannot be
Stained against earnings. A farmer is
not allowed to claim salary for him
self or members Of his family who
work on the farm
Wear and Tear.
Purchase of farm machinery, wag.
ems, work animals etc. also the cost
Of construction or extension of build
mgs. silos, fencing, etc, should be con-
Sidered additional investments in the
karm and are not proper deductions
against income. ~
A reasonable allowance may be
claimed for wear and tear on farm
Buildings Except the farmhouse),
fences, machinery, work animals, wag-
ems, tanks, windmllls 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
seduction, II the machines are used ex-
sIusively for farm purposes and not
for pleasure. Also, in such cases, de-
duetlOn for wear and tear Is allowed.
Farm Losses.
The loss Of growing crop is not q
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
through storm, lightning, food, ETC., IL
I'M 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 deductible from gross In
eone II the animals had beensspur-
chased for draft or breeding purposes.
Shrinkage inSweight or value OF farm
products held for favorable market
prices cannot be 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 at
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
the sale.
The method Of figuring gains and
losses on such transactions il pre-
seribed in the Income Tax regulations
copies Of which may be secured from
Revenue Collectors. :
Forms for Returns.
The Internal Revenue Bureau has
issued an improved Form 1040F for
the use Of farmers. This form, to-
gether with Form l04OA or 1O4O. will
give the farmer explicit information
MS to how to properly figure his net
income for. 1919.
There are two methods Of figuring q
farmers income tax return this year.
He may make his return on the basis
81 the difference between the money
and goods received for his products
and the cash paid out for actual allow
able farm expenses within the year.
Or he may make his return on the ac-
Crnal basis, which means computing
the receipts and expenses that pertain
to the taxable year, excluding income
earned and expenses incurred In pre-
viOus or succeeding years