The Arvada enterprise., 1920-03-04
FARMERS INCOME
SUBJECT To.TAx
Gains for 1919 Must Be Figured
Under y. S. LaW-Returns
Due March is.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be D.
duetsd-Spseiai Form for Farm
lneoms-cash Or Aeeruai
Basis for Computing.
LAND SALE PROFITS TAXABLE.

A farmer, shopkeeper, or tradesman
must figure up his net income for 1919;
and II 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 10.
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
duced ON the farm or purchased and
resold.
Farm Expenses.
From his gross income farmer Is
| allowed to charge of all Of his neces-
sary expenses In the conduct OF the
farm during the year. These include
costs Of planting, cultivatinE, harvest
ing and marketing. In addition to
these costs he may deduct money spent
for trdinary farm tools Of short life
bought during the year. such As shov-
els, rakes, etc. Also, the cost of feed
purchased for his live stock may be
treated, as an expense. in 70 far as
this cost represents actual outlay: but
the value Of his own products fed to
| animals 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 horseshoelng. 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.
AZ 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, ditching, etc, cannot be
claimed against earnings. A farmer is
not allowed 10 claim 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 deductieos
! against income.
A reasonable allowance may be
claimed for wear and tear on farm
buildings (except the fsrmhouse),
fences. machinery, work animals, wsS-
Ons. tanks. windmills and other farm
| equipment which Is used in the cen.
duct of the farm.
Az to autos and tractors, the cost q
these is not an expense. although the
cost Of their upkeer Is an allowable
| deduction. II the machines are used ex.
/ ciusively for farm purposes and not
for pleasure. Also, In such cases, q T.
| duction for wear and tear Is allowed.
Farm Lsssss.
The loss Of growing crop IL not q
proper deduction from income. mas.
much as the value Of the crop had :lot
been taken Into gross income. The
loss Of building or Of machinery
through storm. lightning. hosd. etc. is
an allowable deduction. but care should
he used to ascertain the correct loss
| sustained. as restricted by income tax
regulations.
No deduction In allowed In the case
ef loss Of animals raised on the farm.
but II loss IL 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 he deducted ~ a loss, for
the reason that when such products
are sold the shrInkage will be reflected
In the selling price.
Sale sf 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 in.
come and must be taken into the net
income for the year.
Any person who soil part Of 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 il prescrib.
I'd In the Income Tax reguia tioas,
copies of which may he secured from
Internal Revenue Collectors.
ferms fos NetueNA
The Internal Revenue Bureau has 10.
sued an improved Form 1o40f fer the
use Of farmers. This form, together
with Form 1o40A or 1910. will give the
farmer explicit Information a. to how
to properly figure his net income for
1910.
There are two methods Of figuring Q
farmers income tax return this year.
He may make bis return on the basis
~ 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.
cruul basis. which means computing
the receipts and expenses that pertain
to the taxable year. e:.cludlng income
earned and expenses Incurred In pre-.