Evening capital and Maryland gazette. (Annapolis, Md.) 1910-1922, 1920-03-08
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 Be
Deducted-SpecialF Form for Farm
lncome-cash or Acerual
Basis for Computing.

!. farmer shopkeeper, or tradesman
must figure up his net income for 1919;
plus his other income was sufficient. 10
require an income tax return com
picte return must be filed With the col
leclor of internal revenue by March 10.
A farmer should ascertain the gross
Income OF his farm by computing all
gains derived from the sale or ex-
change of his products, whether pro-
duced Oh the farm or purchased and
resoId.
Farm Expenses.
From his gross income farmer IS
allowed 10 charge off all of his neces
sary expenses in the conduct Of the
farm during the year. These include
costs Of planting. cultiyating, harvest
lng and marketing. In addition to
these costs he may deduct money spent
for ordinary farm tools Of short life
bought during the year. such as SHOW
els, rakes, etc Also, the cost Of feed
purchased for his live stock may be
treated ms an expense IN so far as this
cost represents actual outlay, but the
value of his own products fed TO ami
mails is not Il deductible item.
other farm expenses allowable are
the cost OF minor repairs or buildings
(but not the dwelling house), On fences,
wagons and farm machinery ; also bills
paid for horseShoeing, stock powders.
rock salt, services of veterinary, insur.
nnce Except on dwelling house). gaso-
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 10 improve the farm as in tree
planting, diiching, etc, cannot he
claimed against earnings. 4 farmer Is
not allowed To claim Il salary for him
self or members of his family who
work on the farm.
Wear and Tear.
Purchase of farm machinery, wag
ons, work animals, etc, also the cost
Of construction or extension of build
ings, Silos. fencing, etc, should be con-
SfI1ered 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 farmhouse).
fences. machinery. work animals, wag-
onS, tanks, windmills and other farm
equipment which il used in the CON
duet Of the farm.
As 10 autos and tractors. the cost OF
these is, not an expense, although the
cost of Hher upkeep is an allowable
deduction, if the machines are used ex-
clusiNely for farm purposes and not
for pleasure, Also. In such cases, de-
Iuction for wear and tear is allowed.
Farm Losses.
The loss OF IL 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
through storm lightning. flood, etc, is
m allowable deduction. but care should
be used 10 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 less is deductible 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 be deducted MS 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
hig profits. All such gains constitute
income ami must lac taken into the net
income for the year
Any person who sold part of farm
or ranch, or part of a parcel of land,
must also show any gains realized by
the sale.
The method of figuring gains and
losses on such transactions is pre-
Scrihed in The Income Tax regulations,
copies Of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has
SSued an improved Form 1040F for
he use OF farmers This form, to-
sether with Form 1040A or 1910, will
give the farmer explicit information
as To low To properly figure his net
income for 1919.
There are tive methods of figuring a
farmers income tax return this year.
lie may make his return ON the basis
Of 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-
crial basis, which means computing
the receipts and expenses that pertain
=. tho faxuhit. wear excluding iDcOusa