The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1920-03-19


and IL the farm or business income
plus his other income was sumeient Il
require IN income tax return q com
plete return must be filed with the col
lector Of internal revenue BY March Is
A farmer should ascertain the gress
income of his farm by computing al
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 10
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 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, but the
value of his own products fed to anil
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 billy
paid for horseshoeing, stock powders,
rock salt, services of veterinary, insur:
ance Except on dwelling house), gaso-
limo fnr finp
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 a 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., aase 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 b.
claimed for wear and tear on farm
buildings Except the farmhopse),
fences, machinery, work animals, was-
ons, tanks. windmills and other farm
equipment which II used in the eoa-
duct OF the farm.
Az to autes and tractors, the cast Of
these 10 not An expense, although the
cost OF their upkeep II an allowable :
deduction, Il the machines are used *
clusively tor farm purposes and ut
for pleasure. Also, In such cases, q a.
duction for wear and tear IL allowed.
Farm lessss.
The loss Of growing cror 10 not q ,
proper deduction from income. inAs-
much ~ the value IL the crop had net
been taken into gross income. The
loss Of building or Of machinery
through storm, lightning, food. ETC., IT,.
IN allowable deduction, but care shoulA
be used to ascertain the correct loss,
sustained, as restricted by income tar
regulations.
No deduction 10 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 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 uany owners
sold out part or all of their lands at
big profits. All such gains constitute
income and must be taken into the net
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 transaction is pre-
scribed in the Income Tax regulations,
copies of which may he secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has
issued an improved Form 104OF for
the use Of farmers. This form, t.
gether with Form 1040A or 1O4O, will
gether with Form 1040A or 1910, will
give the farmer explicit information
AZ to how to properly figure his net
income for 1919.
There are two methods Of figuring 4
farmers income tax return this year.
He 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.
Or he may make his return on the" &C.
crual basis, which means computing
the receipts and expenses that pertain
to the taxable year, excluding income
earned and expenses incurred - ~
vious or succeeding years.