Evening capital and Maryland gazette. (Annapolis, Md.) 1910-1922, 1920-03-01
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
Income-Cash or AccruaI
Basis for Computing.

= farmer. shopkeeper, or tradesman
must figure up his net income for 1919;
and IL the farm or business income
plus his other income was sufficient 10
require an income tax return a com
plete return must be flied with the col
lector Of internal revenue by March ID.
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 of 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 so far rs this
cost represents actual outlay, but the
value of his own products fed to ami,
mails is not a 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 horseshoein-. stock powders
rock salt, services of veterinary, insur.
ance Except on dwelling housed, gaso
line for operating power and sundry
other expenses which were paid for In
cash.
AS to hired help, all the productive
lEbor is a deductfble expense; but the
wages Of household servants, or help
hired to improve the farm. as in tree
planting, dtching, etc, cannot he
claimed against earnings. A farmer is
not allowed 10 claim n 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 cas-
of construction or extension Of build
ings, silos. fencing, etc, should be con
sdered 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, windmlls and other farm
equipment which is used in the con
duet of the farm
As 10 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, a de.
duction for wear and tear is allowed
Farm Losses.
The loss of growing crop is not q
proper deduction from income, mas
much as the value of the crop had not
been taken into gross income. The
loss of building or of machinery
through storm. lightning, flood. etc, is
an allowable deduction. but care should
be used 10 ascertain the correct loss
sustained, as restricted ny 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 if 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 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 az
big profits. All such gains constitute
income AMI must he taken into the nel
income for the year.
Any person who sold part of a farm
or ranch, or part of a parcel Of land
must also show any gains realized BY
the sale
The method of figuring gains and
losses on such transactions is pre-
scribed in the Income Tax regulations
copies of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has
issued an improved Form 1040F foi
the use of farmers. This form, to
gether with Form 1040A or 104O, viii
give the farmer explicit information
as TO how TO properly figure his mel
income for 1919.
There are two methods of figuring