Evening capital and Maryland gazette. (Annapolis, Md.) 1910-1922, 1920-02-17
FIGURING INCOME
TAX IS PROBLEM
FOR THE FARMERS
They Will Have To Do Much
Juggling In Order To Deter
mine Their Returns - Officials
. Wonder IF Regulations Are
Understood
CORRECT METHOD
NOW is EXPLAINED

With thousands of income tax re-
turn forms in the hands OF farmers
many OF whom in some parts of the
country have been computing their
AK assessments by system thar
causes the big Agricultural States lie
make much smaller comparative re-
turns than The industrial States. the
officials of the Bureau of Internal
Revenue of Maryland are wondering
Il the farmers thoroughly understand
he method by which they must make
heir computations.
Whether the farmers figdre incor-
rectly or doge taxes. the Internal
Revenue officials have never been able
understand
TIVE Ways To Figure Returns
Form No I040-F is designed for
farmers. stock raisers and truckers
o be filed. if necessary. with the
other forms, 1040-A for the income
Inder $4,000 and 1o40 for incomes
over $4,000. Whether the farmer is
IN owner or a tenant he has his OBJ
ligation 10 meet. There are two ways
which he may figure his income for
he year, either OF which will be ac-
,eptable for income tax The first
IS the cash basis" This means. as the
term implies, the difference between
he intake" in money and goods re-
,eived for his products. and the cash
)aid out for actual farm expenses
within the year
II also means that if he did not sell
lis grain hogs. cattle. sheep or other
products before January /, 1920, then
he vaiue of the crop or animals rails
ID is not leone for 1919. but will be
income for the year in which sold
Similarly, if he sold during 1919 any
hing raised or grown in prior year
1 is income for 1919.
The second or accrued method, is
" computing the receipts and ex-
,enses incurred, whether paid or not,
hat actually pertain to the taxable
ear excluding income earned and
expenses incurred in previous or sue
,eeding years
Gross Income Outlined
The omputation of the gross in
,omo may cause the farmer a little
tall figuring MI gains, profits and
ncome derived from the sale or ex-
Produced OH the farm or purchased
md resold is included in gross in
come" When he exchanges his prod
lets for groceries, clothing. or other
articles he must include in his gross
income the value of the articles re-
seiyed in exchange. A farmer who
cts cut a farm on a crop-share basis
must report the cash received when
he crops are sold. A farmer who
cts out a farm or a cash rental basis
md is paid in crops must report the
sxact cash rental agreed upon whe-
her or not the crops are disposed
If Tie entire amount received for
animals raised on the farms should
re included in gross income.
From his gross income farmer is
allowed to charge off all of his nee
sssary expenses in the conduct of the
arm during the year. These include
costs of putting in his crop, of car
ng for his crop. and of harvesting
md marketing In addition to these
,osts he may deduct money spent for
ordinary farm tools of short life
bought duEing the year such as show
SIS. rakes. etc Also, the cost of feed
purchased for his livestock may be
reated as an expense, so far as this
,ost represents actual outlay; but the
,are Of his own products fed to anit
nails is no; deductable item.
improvements As Investment
If during the year the farmer pur-
,hased trees for the planting of an or
hard. or if he built or improved the
farm drainage. pulled stumps on the
arm. dug a we'll. erected a barn or
new fence. or expended money for
any other purposes that improved his
farm, such expenditures are not
chargeable against the income for the
wear. There is a reason for this
which the farmer will readily I'M
ierssand. and that is that person
who makes such improvements is not
spending his money, but investing it
in improvements.
Every farmer will want to know
now he will treat loss caused by a
storm in which his crop or part of
il is ruined. Unless the crop reaches
it's maturity and is harvested and
sold. is value never reached gross in
come, and. therefore, an arbitrary de-
duction for the loss cannot be allow
I'd. The cost of planting. fertilizing
and cultivating that crop is allowed
in regular order, but the loss of a