The Colfax chronicle., 1920-02-28
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
peducted-speciaI Form for Farm
Income-Cash or Accrual
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 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 on the farm or purchased and
resold.
Farm Expenses.
From his gross income a 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 shoy-
els, rakes, 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
(but not the dwelling house), on fences.
wagons and farm machinery also bills
paid for horseshoeing, stock powders.
rock salt, services of veterinary, insur-
ance 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 to improve the farm, as in tree
planting, ditching, etc. cannot be
claimed 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. 4
| Purchase of farm machinery, wag1
ons, work animals, ETC., also the cost
| Of construction or extension of builds
inss, silos, fencing, etc, should be con-
sidered additional investments In the
farm and are not proper deductions
| against income.
A reasonable allowance may be
| otot,,ol for x,aor opd toor on fa ru1
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
Il deduction, if the machines are used ex
clusively for farm purposes and moi
for pleasure. Also. in such cases, de
duction for wear and tear is allowed.
Farm Losses.
The loss of a growing crop is not {
. proper deduction from income, mas
much as the value of the crop had no
been taken into gross income. Th'
| loss of building or of machiner.
) through storm, lightning, flood. ETC., 4
, an allowable deduction, but care shoul'
be used to ascertain the correct los
7 sustained, as restricted by income Ia.
/ regulations.
No deduction is allowed In the cas-
of loss of animals raised on the farm
but a loss is deductible from gross ir
come If the animals had been pul
chased for draft or breeding purposes.
Shrinkage in weight or value of farr
products held for favorable marke
prices cannot be deducted as a loss, 70
the reason that when such product
! are sold the shrinkage will be refecte
e in the selling price.
el Sale of Farms and Land
The value of agricultural lands hf
+, been jumping during the past fe
u years, and during 1919 many owner
It sold out part or all of their lands
h big profits. All such gains constitu
income and must be taken into the NJ
i income for the year.
IS Any person who sold part of a far
l. or ranch, or part of parcel of Ian
must also show any gains realized
% the sale.
ol The method of figuring gains al
,s losses on such transactions is pr
scribed in the Income Tax regulation
y. copies of which may be secured fro
ID Internal Revenue Collectors.
(. Forms for Returns.
The Internal Revenue Bureau h
issued an improved Form 1040F +
o, the use of farmers This form,
Nv gether with Form 1040A or 1910, W
~ give the farmer explicit informati
:" as to how to properly figure his n
&c income for 1919.
ut There are two methods of figuring
farmers income tax return this yei
He may make his return on the ba:
n of the difference between the mon
he and goods received for his produt
| - oil