The Denison review. [volume] (Denison, Iowa) 1867-current, 1920-06-30
new ] y! TAX PLAN ON
y FARM INCOMES
Committee of Iowa Farm Bureau Fa.
vors New System Of Reports-In.
ia%, come Tax Reports.
TREASURY OFFICIALS APPROVE
Inventory System of Reporting Income
Held to be the Only Fair Method
For the Farmers.
TREASURY OFFICIALS APPROVE

Inventory System of Reporting Income
Held to be the Only Fair Method
For the Farmers.
l..
AMES, June 2B.-'rhe Iowa Farm
Bureau Federation named committee
last winter to work out changes in
the form of farm income tax reports
with George NJ. Fox, vice-president
of the federation as chairman
After a thorough study of the matter
the report was framed and taken to
Washington by Mr.. Fox and Ray A..
Emt,eft, Of Des Moincs. They were
In session with treasury officials for
Several days and recently, as reported
at the time in these columns, and made
their first official report "Wednesday
this week at Ames. The report fol-
lows:
The matter of income tax as ap-
piled to all business has been one of
great concern. We have come to adj
nit shat it is not a bad way in which
to derive revenue for government ex-
penSe, and n method which likely will
continue, irrespective Of political
changes.
The method Of applying has caused
a great deal of dissatisfaction, aspect
ally among farmers. A great many
did not keep books prior to the enact
ment Of the income law of 1918, and
unfortunately, when they began to
Keep records the department of inter-
nal revenue together with some of the
banks and some of the county agents,
encouraged them to report on the cash
basis. They did this without realizing
or taking into consideration the endless
amount of dissatisfaction and incquall-
ties of taxation to which the taxpayer
became subject. The American Farm
Bureau Federation is undertaking to
establish a system of accounting TO,
the farmer and presenting the present
inequalities and Irregularities before
the internal revenue department in an
effort to secure justice.
Your committee appointed for con-
sideratiOn of and action on income tax
problems have recently had Il confer
encc with the treasury department in
Washington. ID. c.. in an effort to Sc
cure remedial rulings or decisions on
the various matters complained OF by
the taxpayer.
AS a basis for securing a hearing
with the treasury department, the com
mittee submitted the brief previously
prepared by a committee appointed by
the Dallas County Farm Bureau. Of
which your chairman was a member,
and which brief was later adopted by
the state and national federation, and
upon it's filing and oral discussions with
this committee, it is accepted and APP
proved in full by the department and
particularly as to the showing that the
present cash basis" is inequitable and
gives Just cause for complaint.
Treasury Wishes TO be Fair.
Al In the conference with the revenue
department, we found that they are
fair. All agreed that the intention of
the law was simply to tax profits. This
one fact gives plenty of latitude in
which to adjust all difficulties that
have arisen under the application Of
the law.
No one will question, neither does
the department of internal revenue.
question the fact that where tax
payer reporting on the cash basis sells
out his entire. personal property that
the entire amount of sale necessarily
be considered as profit.
Any set rule to determine what
amount was on hand and exempt from
taxation at the time the individual be-
came subject to tax is very hard to
determine and can only be done ac-
curately by treating each case on it's
merits.
Favor the Inventory System.
The committee is convinced that the
inventory system Of reporting income
is the only true method of ascertaining
and reporting income or profit and Sc
curing proper deductions and paying
tax for the years in which earned.
We are also satisfied that the depart
ment of Internal revenue is of the same
mind, although they will not favor one
method in preference to, the other but
are free to- admit that when a farmer
is once established on an inventory
basis of reporting that all the gross
Irregularities and inequalities, which
are the great source Of contention, are
eliminated.
Change from Cash to Inventory.
How to change from cash to invcn-
tory was one of the more difficult prob
lens that have represented to the
treasury department for decision and
on which several rulings have been
made. The latest of which 1S-2O-S93
o. d. 4Sl says that in changing from
cash to inventory only those items may
be used in the opening inventory which
were, purchased and which had not been
used as deduction up to that time.
This ruling automatically imposes a
tax on the total stock, grain, etc,
raised III previous years, to which your
committee strenuOusly objected, since
such items may, have been raised dur
ing years when the income tax payer