The Challis messenger. (Challis, Idaho) 1912-current, 1920-03-03

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 De-
, ductsd-special Form for Farm
lncome-cash or Acerual
I8is. Basis for Computing. ,M3g

A farmer, shOplsceper, or tradesman
must figure up his net income for 1919 !;
and II the farm or business income
plts his other income was sufficient to
require mn income tax return, COM
pieto return must be filed with the col
Iector Of internal revenue by March ID.
A farmer should ascertain the gross
fncOme 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.
r From his gross income n farmer IL
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
Tor ordinary farm tools Of short life
bought during the year, such as shov.
els inkes, etc. Also, the cost OF feed
purchased for his live stock may be
treated MS an expense, In SO far az
TINS 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 housed, on fences,
wagons and farm machinery also bills
Paid for horseshoeing, 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 IL deductible expense but the
wnges Of household servants, or help
hired to improve the farm, us In tree
planting, ditchlng, etc, cannot be
claimed against earnings, A farmer is
not allowed to 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.
stuered 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-
oqs. tanks, windmills ana other farm
equipment which Is used in the con
duct Of the farm
As to autos and tractors, the cost Of
these IL not an expense, although the
cost OF their upkeep Is an allowable
II 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 u growing crop Is not a
proper deduction from income, mas
much as the value q the crop had lot |
been taken Into gross income. The
loss OF a building or of machinery
through storm, lightning. flood, ETC., is !,
M allowable deduction, but care should |
be used to ascertain the correct loss
sustained, us restricted by income tax
No deduction Is allowed In the case
Of loss Of animals raised on the farm.
bat loss Is deductible from gross In
come II the animals had been pur-
chased for draft or breeding purposes.
Shrlnkage 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 win be reflected
In the selling price.
Sale Of Farms and Land.
The value OF agricultural lands has
been jumping during the past few
years, and during 1910 many owners
sOll oct part or all of their lands ut big
profits. All such gains constitute In
come and must be- taken into the net
Income for the year.
Any person who sol ! part of a farm
Or ranch. or part OF a parcel of land,
must also show any gains realized by
The sale. ~
The method Of figuring gains ana
losses on such transactions is prescrib-
I'd in the Income Tax regulations.
copies Of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has IL.
'ued an improved Form 1O4OF for the
lse Of farmers. This form, together
With Form 1O4OA or 1O4O, will give the
'armer explicit Information ar to how
o properly figure his net Income for
01O.
There are two methods Of figuring
arlner's income tax return this year.
lie may make his return on the basis
4 the difference between the money
md goods received for his products
md the cash paid out for actual allow.
bile farm expenses within the year. /
D. he may make his return on the &C.
rudl basis. which means computing
he receipts and expenses that pertain
o the taxable year, excluding income