The Mellette County pioneer. [volume] (Wood, Mellette County, S.D.) 19??-1971, 1920-03-12
Gains for 1919 Must Be Figured
Under u. S. LaW--ReturnS
q, Due March IS.
land SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be De
ducted--Special Form for Farm
lncome-Cash or Accrual
Basis for Computing. Y

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
pletc return must be filed with the col
lector of internal revenue by March Is.
A farmer should ascertain the gross
income Of his farm by computing all
gains derived from tie sale or ex.
change Of his products, whether pro-
duced 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
ng and marketing. In addition to
ghese 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
purchased for his i've stock may be
treated rs an expense, In so far as
this cost represents actual outlay but
the value OF his own products fed to
animals is not a 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 horscshoeing, stock powders,
rock salt, services Of veterinary, insur-
,ance Except on dwelling housed, 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, ditching, 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, wsg-
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
arm and are not proper deductions
against income.
A reasonable allowance may he
claimed for wear and tear on farm
buildings Except the f~arnhouse), |
fences, machinery, work animals, wag-
ms, 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, IL the machines are used ex-
clusively for farm purposes and not
fOr pleasure. Also, In such cases, a de-
uction for wear and tear i~sallowed.
Farm Losses.
The loss Of a growing crop Is not a
proper deduction from income, mas
much as the value Of the crop had lot
been taken into gross income. The
loss Of a building or Of machinery
through storm, lightning, food, ETC., IL
an allowable deduction, but care should
be used to ascertain the correct loss
sustained, as restricted by income tax
regulations.
" uCuuCllOH rs HiiOW6u III the case
Of loss of animals raised on the farm,
but a 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 a loss, for
he reason that when such products
ire sold the shrinkage will be reflected
n the selling price.
Sale Of Farms and Land.
The value Of agricultural lands has
peen jumping during the past few
-ears. and during 1919 many owners
old out part or all Of their lands at big
Profits. All such gains constitute in
ONE and must be taken into the net
ncome for the year.
Any person who soil part Of a farm
r ranch, or part of a parcel of land,
INST also show any gains realized by
ne sale.
The method of figuring gains and
Psses on such transactions is prescrib-
In the Income Tax regulations.
bpies of which may be secured from
pternal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has Is
ed an Improved Form 1O4OF for the
e ~ farmers. This form. together
III Form 1040A or 1910, will give the
rmer explicit information as to how
properly figure his net income for
l9.
There are two methods Of figuring a
Fmer'1 income tax return this year
may make his return on the basis
the difference between the money
goods received for his products
the cash paid out for actual allow.
e farm expenses within the year.
he may make his return on the ac-
al basis, which means computing 4
receipts and expenses that pertain
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