Montpelier examiner. [volume] (Montpelier, Idaho) 1895-1937, 1920-03-19
FARMERS INCOME
SUBJECT TO TAX
Gains for 1919 Must Be Figured
Under U. S. taW-ReturnS
Due March Is.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May BE De.
dueted-Special Form for Farm
lncome-cash or Acerual
Basis for Computing.

A farmer, shopkeeper, or tradcsman
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 IL.
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 of all OF his neces
sary expenses In the conduct OF the
farm during the year. These include
costs of planting, cutivating 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 so far as
this cost represents actual outlay hui
the value of his own products fed to
animals Is not u deductible item.
Other farm expenses allowable are
the cost of minor repairs on buildings
(but not the dwelling housed, on fences.
wagons and farm machinery; also bills
paid for horseshoeing, stock powders.
rock salt, services of veterinary, insur.
ance Except on dwelling housed. gaso
line for operating power and sundrS
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 helm
hired TO improve the farif. as In tree
planting, di,ching. 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.
Purchases of farm machinery, wag-
ons, work animals, etc. also the cost
OF construction or extension OF build
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 upkeer is an allowable
deduction, If the machines are used ex-
clusively for farm purposes and not
for pleasure. Also, in such cases, a de-
ductlon for wear and tear Is allowed.
Farm Losses.
The loss OF growing crop is not n
proper deduction from income, mas
much as the value of the crop had OF
been taken into gross income. The
loss of building or OF machinery
through storm, lightning flood etc, Is
an allowable deduction, but care should
he used to ascertain the correct ioss
sustained. as restricted by income tax
regulations
No deduction is allowed In the case
Of loss Of animals raised on the farm.
but loss is deductible from gross IN.
come II 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 as a 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 big
profits. All such gains constitute IN,
come and must be taken into the net
income for the "ear.
Any person who sol part OF farm
or ranch, or part of a parcel OF land.
must alse show any gains realized by
The sale.
The method Of figuring gains and
losses on such transactions Is prescril,.
ed in the Income Tax regulations.
copies of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has Is
sued an improved Form 104OF for the
use OF farmers. This form, togethe.
with Form 1040A or 1910, Will give me
farmer explicit information as to how
TO properly figure his net income for
1919.
There are two methods Of figuring a I
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. l
Or he may make his return on the ac- I
crual basis. which means computing
the receipts and expenses that pertain /
fO The taxable wear q cfudfoo Iuoo,....