New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1920-01-21

are not large enough to be taxed, may feel
fairly secure in case check of their
business is made, as has been done in
several Minnesota communities by Gov
eminent agents the past few months.
By such records they are able to prove
exemption from tax, or that the returns
made were authentic. r..
Emphasis should be given to the
need for every farmer keeping records,
so that, if called upon, he may show
that he has complied with all require
ments of the law states Mr.. Cavert.
Particular attention should be given
to keeping a full record of the cash out
outlay for all improvements, such as
buildings, things, fences, etc., also for
new machinery, equipment, etc.
While the following interpretations
of the law are not official, Mr.. Cavert
states that they are based on the pres
ent methods of handling farm income
tax returns by federal officials. -
Board of Labor.
Farm products consumed in the
family, such as pork, eggs, milk, etc.,
are not considered income. Therefore,
one cannot charge board Of labor at the
market price, for the reason that if this
were done, in order to be consistent,
one would also have to include the farm
products consumed by the hired man
as income. One is entitled to claim
deduction for board of hired help &C
cording to the amount that the. extra
help would increase the grocery bill
of the family. This will vary greatly
according to the amount Of farm prod
ucts, particularly meat, furnished for
family use; but upon the basis of Mime
sofa Bulletin No. 1862 entitled "The Cost.
of Living on Minnesota Farms it might
be estimated that on the average one is
entitled to claim as a deduction about
one-third Of the going rate for board.
Wages for Children.
One cannot claim as a deductible
expense wages paid to children under
Fl years of age, for the reason that the
total income of father, mother and minor
children is taken together in one re-
turn as the family unit Further
more, in the eyes Of the law, the wages
of minor children are the property
of the parent. In the case of children
over 81 years Of age, one cannot claim
wages for farm work for such children,
unless such wages were actually paid.
This ruling should greatly encourage
farmers to follow the businesslike arrange
ment of paying children over 81 years
OF age going wages, rather than expect
them to get their pay out of the inheri-
lance they may receive from the fathers
estate
Depreciation on Livestock.
Depreciation on work horses and breed
ing stock may be charged as an expense
only on such work horses and breed
ing stock as have actually been pur-
chased or. were owned prior to March
1, 1918, for the reason that such ami
mails have never been reported as in.
come. In each case, the basis for es-
timating depreciation is the purchase
| price or value on March /, 1918, and
the expectation of years of usefulness.
For example, purebred heifer pur-
chased for $500 and having an esti-
mated annual depreciation of IL 1870
would have an annual depreciation of
$37.5 If at the end Of two years the
animal were sold for $3.50 the difference
between 1925 and $3.50 or $125, would
be reported as income for the year in
which the sale was made, as according
to the depreciation rate the animal at
the end of two years was only worth
1925. If at the end of two years the,
animal were sold for $1O0, the diff
ference between $500 and $3.50 would
be a deductible loss fores the year in
which the sale was made.
| Livestock Purchased for Resale.
/ In the case Of hogs. cattle and sheep
purchased for feeding, the purchase
price of the animals is a deductable
expense for the year in which the an
imals are sold. During 1917 and prior
thereto the purchase price was consid-
cred as an expense for the year in which
the animals were bought, instead Of for
the year in which the animals were
sold; therefore, if the animals were
sold in 1919, the purchase price Of which
was deducted for the year in which the
animals were bought, no deduction could
be made in 1919. &,
Losses by Death.
No deduction can be made for the
death Of animals raised by the owner,