Webster City freeman. [volume] (Webster City, Hamilton County, Iowa) 1884-1946, 1920-06-28
DEv|SES plan
TO TAX FARMERS
Committee of the Iowa
Farm Bureau Fedora
ton FavOrs new Sys-
tenn of Reports.
APPROVED BY u. S.
Recommends Change From
Cash System to Inven-
tory Plan.
APPROVED BY U. S.

out changes in the form OF farm In
come tax reports with George NJ. Fox,
vice president of the federation as
chairman.
After thorough study of the mat
ter, the report was framed and taken
to Washington by Mr.. Fox and Ray A.
Emmert Of Des MOines. They were in
session with treasury officials for sew
eral days and made their first official
report this week. The report follows
in part:
The matter Of income tax as ap-
piled to all business has been one of
great concern We have come to admit
that it is not bad way in which to
derive revenue for government reve-
nue. for government expense, and a
method which likely will continue, ir-
respective Of political changes.
The method of applying has caused
a great deal of dissatisfaction, es-
pecially among farmers A great many
did not keep books prior to the enact
ment of the income law of 1918, and,
unfortunately, when they began to keep
records the department Of internal
revenue, together with some OF the
banks and some of the county agents
encouraged them to report on the
cash basis. They did this without
realizing or taking into consideration
the endless amount of dissatisfaction
and inequalities OF taxation to which
the taxpayer became subject. The
American Farm Bureau Federation is
undertaking to establish a system Of
accounting for the farmer and present
ing the present inequalities and irregu-
Mrities before the internal revenue de-
partment in an effort to secure justice.
AS a basis 70. securing hearing
with the treasury department, the com
mittee submitted the brief previously
prepared by committee appointed by
the Dallas County Farm Bureau, of
which your chairman was member,
and which brief was later adopted by
the state and national federation, and
upon its filing and oral discussions
with this committee, it is accepted and
approved in full by the department and
particularly as to the showing that the
present cash basis is inequitable and
gives just cause for complaint.
Treasury Wishes to Be Fair.
In the conference with the revenue
department. we found that they are
fair. All agreed that the intention of
the law was simply to tax profits. This
one fact gives plenty of latitude In
which to adjust all difficulties that
have arisen under the application Of
the law.
No one will question, neither does
the department Of internal revenue
question the fact, that where tax
payer reporting on the cash basis sells
out his entire personal property, that
the entire amount of sale necessarily
be considered as profit.
Favor the Inventory System.
The committee is convinced that
the inventory system Of reporting in
come Is the only true method of ascer-
tanning and reporting income or profit
and securing proper deductions and
paying tax for the years In which
earned.
We are also satisfied that the de-
partment of internal revenue is Of the
same mind, although they will not IA
vOr one method in preference to the
other, but are free to admit that when
farmer is once established on an in
ventOry basis, or reporting that all
gross Irregularities and inequalities,
which are the great source of cOnten-
ton, are eliminated
Change From cash TO Inventory.
How to change from cash to inven-
tory was one OF the more difficult prob
lens that have been presented to
the treasury department for decision
aud on which several rulings have
been made. The latest OF which 1920
SOB o. ID. 4S1 says that in changing
from cash to inventory only those
items may he used In the opening in
ventory which were purchased and
which had not been used as a deduc-
tion up to that time.
This ruling automatically imposes a
tax on the total stock, grain, etc,
raised In previous years, to which
your committee strenuOsly objected,
since such items may have been raised
during years when the income tax
payer was tax Free To eliminate all
articles raised from the opening in
ventory what is virtually capital tax
on all that portion raised during the
years when the income of the tax pay |
o. was tax free and Is contrary to both