The Newark journal., 1920-03-04
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-SpecialF Form for Farm lncome-Cash or Accrual
 Basis for Computing.

A farmer, shopkeeper, or tradesman must figure up his net income for 1919 1; and if the farm or business income plus his other income was sufficient to require an income tax return a com plete return must be filed with the col lector of internal revenue by March 15.
 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 resold.
 Farm Expenses.
 From his gross income a farmer Is allowed to charge off all of his neees- 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
 
 treated as an expense In so far as this cost represents actual outlay, but the value of his own products fed to ani- mals 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 ill 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.
 Purchase 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 upkeep is an allowable deduction, if the machines are used ex- clusyelye for farm purposes and not for pleasure Also, Tn such cases. a de- duction for wear and tear is allowed.
 Farm Lossee
 The loss of growing crop Is not q proper deduction from income, inas- much as the value of the crop had not been taken into gross income The loss cf a building or of machinery through storm, lightning, flood. etc, is an allowable deduction, but care should be used to ascertain the correct loss sustained, as restricted by income tax regulations
 No deduction is allowed In the case of loss of animals raised on the farm, but a loss is deductibe 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 a loss, for the reason that when such prodscts 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 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 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 for the use of farmers. This form, to- gether with Form 1040A or 10i0, will give the farmer explicit information as to how to properly figure his net income for 1919
 There are two methods of figuring a 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 ac- | erual basis, which means computing | fhe receipts and expenses that pertain 1 to the taxable year, excluding Income | l.