Fair play., 1920-03-06
FARMERS INCOME
SUBJECT TO TAX
Gains for 1919 Must Be Figured
u.ader U. S. LaW-Returns
Due March IS.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be De.
ductcd-speciai Form for Farm
lncome-cash o. Aeerual
Basis for Computing.

A farmer, shopkeeper, or tradesman
must figure up his net income for 1919;
and " - farm or business income
plu, rr income was sufficient to
requ.lr an income tax return, a COM
plete return must be filed with the col
lector of internal revenue by March 15.
farmer should ascer n the gross
income Of his farm by computing all
gains derived from the sale or ex-
change of his products, whether pro-
duccd on the farm or purchased and
resold.
Farm Expenses.
From his gross income a farmer Is
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
N'''' i'h'', W. hiSot tiC SoSt Va ASSS
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
animals Is not Geductible 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 a deductible expense; but the
wages of household servants, or help
hired to improve the farm, as in tree
planting, dtching, 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.
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
h,ti linn Co. ,Ir,, ~
fences, machinery, work animals, wag-
ons, tanks, windmils 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 OK
clusively for farm purposes and not
for pleasure. Also, in such cases, de-
huction for wear and tear Is allowed.
Farm Losses.
The loss Of a growing crop is not a
| proper deduction from income, mas
much as the value of the crop had .ol
been taken into gross income. The
loss of Il building or Of machinery
through storm, lightning food, etc, IL
an allowable deduction, but care should
he used to ascertain the correct loss
sustained, as restricted by income tax
| regulations.
| No deduction is allowed in the case
VT loss of animals raised on the farm
Tut n loss is deductible from gross in
come If the animals had been Dur
chased for draft or breeding purposes
Shrinkage in weight or value of farm
products held for favorable marke
prices cannot he deducted as n loss, fol
the reason that when such product.
are sold the shrinkage will be reflected
in the selling price.
Sale Of Farms and Land.
The value Of agricultural lands ha
been jumping during the past fev
years. and during 1919 many owner
sold out part or all of their lands at BIZ
profits. All such gains constitute in
come and must be taken into the ne
J income for the "ear.
Any person who sol part of a farm
or ranch or part Of parcel of land
must also show any gains realized b
the sale.
The method Of figuring gains an
losses on such transactions Is prescrit
ed in the Income Tax regulation.
copies Of which may be secured fror
Internal Revenue Collectors.
ForTs for Returns,
The Internal Revenue Bureau bos Ia
sued an improved Form l04OF for III
use OF farmers. This form, togethe
with Form 1040A or lO4O will Give ~,