Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1920-03-10
FARMERS INCOME
SUBJECT TO TAX
Gains for 1919 Must Be Figured
Under U. S. Law Returns
Due March IS.
LAND SALE PROFITS TAXABLE.

LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Do.
Deducted Special Form for Farm
Income Cash or Acerual
Basis for. Computing.
A farmer, shopkeeper, or tradesman
must figure up his net income for 1919 !;
s and II the farm or business income
plus his other income was sufficient to
require an income tax return COM
plete return must be fled with the coli
1ector Of internal revenue by March 10.
a farmer should ascertain the gross
income Of his farm by computing all
Z gains derived from the sale or ex-
change Of his products, whether pro-
duced on the farm or purchased and
rssold.
Farm Expenses.
1 From his gross income farmer 10
allowed to charge of all Of his neces-
sary expenses in the conduct of the
farm during the year. These include
costs Of planting, cultivatjng, harvest
ing and marketing. In addition to
these costs he may deduct money spent
Tor ordinary farm tools Of short life
/ beught during the year. such as show
eli. rakes. etc Also. the cost OF feed
purchased for his live stock may be
treated as an expense in SO far 90 this
cost represents actual outlay. but the
value Of his own products fed to ami
mails II not deductibie item.
Othel farm expenses allowable are
the cost Of minor repairs on buildings
(but not the dwelling house) on fences,
wagons and farm machinery: alss bills
1 paid Tor horsesh0eing, stock powders,
Srock salt, services Of veterinary, insur-
4 aAce Except on dwelling hOuse), case
Ine for operating power and ssndry
other expenses which were paid for II
cnah. III 81
- to hired help. all the productive
labor u dedsctibls expense; but the
wages Of household servants, or help
hired to improve the farm, % II tree
planting, ditching. etc. cannot b
claimed against earnings. A farmer 10
net allowed TO claim Q salary fer hin
~ Or members Of his family vhs
wsrk on the farm.
Wear and Teae.
Purchase Of farm machinery, wag-
/ 90, work animals, etc, alss the cost
u construction or extension Of build-
ings, silos, fencing, etc, should be con-
silered additional Investments in the
farm apd are not proper deductions
against income.
y 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 II not IN expense. although the
cost Of their upkeep is an allowable
deduction, II 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 Il not
proper deduction from income, mas
much as the value OF the crop had not
been taken into gross income. The
loss Of a building or Of machinery
through storm, lightning, flood, etc, Ii
IN allowable deduction, but care should
lbe 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 loss Is deductible from gross in
come IL 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 valve 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 farm
or ranch, or part Of parcel of land,
must also show any gains realized by
the sale.
The method Of figuring gains and
losses on ouch 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 m improved Form 1O4OF. for
the use Of farmers. This form, to-
gether with Form 1O4OA or 1910, will
give the farmer explicit information
as to how to properly figure his net
income for 1919.
There are two methods Of figuring
farmers income tax return this year !
He may make his return on tie 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 In pre-