Audubon County journal. (Exira, Iowa) 1884-1993, 1920-03-04
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-special Form for Farm
lncome-cash or Accrua
Basis for Computing.

A farmer Shopkeeper, or tradesman
must figure up his net income for 1919;
and If the farm or business income
plus his other income was sufficient to
require an income tax return com
plete return must be filed with the col
lector 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-
change of his products, whether pro-
duced on the farm or purchased and
reSold.
Farm Expenses.
From his gross income farmer Is
allowed to charge off all of his neces-
sary expenses in the conduct of the
farm during the year These include
costs of planting, cultivating, harvest
ing 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 as an expense in 80 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
fbut not the dwelling house), on fences,
wagons and farm machinery also bills
paid for horseshoeing, stock powders
rock salt, services of veterinary. ;nsur-
ance Except on dwelling house), sas"-
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 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-
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 farmhouse).
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, dc
duction for wear and tear Is allowed
Farm Losses.
The loss of growing crop is not
proper deduction from income, mas
much as the value of the crop had not
been taken into gross income. The
loss of a building or of machinery
through storm, lightning, flood, etc, is
an allowable deduction. but care should
be used 10 ascertain tile 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 Il loss is deflnctible from gross in
come if the animals had been pur-
chased for draft or breeding purposes.
Shrinkage in weigh, or value of farm
hrJ1 Fn
prices cannot he deducted as loss, for
the reason that when such products
are sold the shrnkage will be reflected
in the selling price.
Sale Of Farms and Land.
The value of agricultural lands has
been jumping during the past few
wears, and during 1919 many owners
sold ont part or all of their lnnds 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 Il farm
or ranch, or part of parcel of land,
muSi also show any gains realized by
the sale.
The method of figuring gains and
losses on Sucn transactions Is pre-
scrihcd in the Income Tax regulations
copies OF which may he secured from
Internal Revenue Collectors.
Forms for Returns
The Internal Revenue Bureau has
issued an improved Form l04OF for
the use Of farmers This form, to-
gether with Form 1040A or 1910, will
give the farmer explicit information
as to how TO properly figure his net
income for 1919.
There are two methods OF figuring
farmers income tax return this year
He may make his return on tile 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
crual basis which means computing
The rcceipts and expenses that pertain
10 the taxable year, excluding income
earned and expenses incurred in pre-