The L'Anse sentinel., 1920-03-05
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FARMERS INCOME.
SUBJECT TO- TAX
Gains for 1919 Must Be Figured
Under U. S. Law-Returns
Due March IS.
LAND SALE, PROFITS TAXABLE.
Necessary Farm Expenses May Be
Dsducted-speciaI Form for Farm
income-cash or AceruaI
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 ans,income tax return com
plete 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 the sale or ex-
change OF his products. whether pro-
dueed 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
els, vakes. etc. Also, the cost Of feed
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 ami
mails Is not deductible item.
Other farm expenses allowable are
the cost OF minor repairs on buildings
tbut not the dwelling house), on fences,
wagons and farm machinery; also bills
paid for horsoshoeing, stock powders.
rock salt. services Of veterinary. insur-
anee 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, 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
Swork on the farm.
Wear and Tear.
Purchase 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
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 aud 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, de-
-duction for wear and tear Is allowed
Farm Losses.
The loss of growing crop Is not q
proper deduction from income, mas
much as the value Of the crop had moi
been taken into gross income. The
loss of building or of machinery
through storm, lightning, flood. ETC., u
an allowable deduction, but care should
be used to ascertain the correct loss
sustained, as restricted by income ta>
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 marke
prices cannot be deducted as loss. fo
the reason that when such products
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 fey
years, and during 1910 many owner
sold out part or all OF their lands
big profits. All such gains constltut
income and must be taken into the ne
income fnr the year.
Any person who sold part Of a farr
or ranch, or part of parcel Of liant
must also show any gains realized D
the sale.
The method or nguring gains an
losses on such transactions IL pr
scribed In the Income Tax regulation
copies Of which may be secured froi
Internal Revenue Collectors.
Forms Tor Returns.
The Internal Revenue Bureau ha
isyued nm improved Form 1040F "a
the use OF farmer4 This form, t
tether withaForm lO40A Of 1040. wi
give the fa1mer explicit informatio
as to how fS properly fgbre his M
income for 1919.
There are two methods Of flguring
Il fariker's income tax return this yea
: He Bay mike Ills return on the bas
OF the difference between the none
and goods received for his product
and the cash paid out for actual ALLOW
abDs farm expenses within the yea
.Of hc may make his return on NE \
cr,,ai basis, which means competl
IT, receipts and skpedsss that perty
q ne thxHbls year, excIudint lpcd
earns1 snd expenses incurred - ~
ss4us az succeeding 5earA Z,