Roanoke Rapids herald. [volume] (Roanoke Rapids, N.C.) 1914-192?, 1920-09-10
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FARMERS |NCOME
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 Do
duetsd-spsoIai Form for Farm
ineeme-cash Or Aocruai
Basis for Computing.
LAND SALE PROFITS TAXABLE.

A farmer, shspkeeper, 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, COM
plsts return must be fled with the col
lscter Of internal revenue by March ID.
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-
ducsd on the farm Or purchased and
resold.
Farm Expenses.
From his gross income a farmer II
allowed to charge Of 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 shov-
els, rakes, etc. Also. the cost Of feed
purchased for his live stock may be
treated a. an expense, In 50 far az
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 housed, on fences,
wagons and farm machinery; also bills
paid for horseshoeing. 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.
As to hired help, all the productive
labor Is q deductibie 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 10
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, wag-
ons, work animals, etc.. also the cost
Of construction or extension Of build
ings, silos, fencing, etc. should be con-
sidsrsd additional investments In the
farm and are net proper deductions
against income.
4 reasonable allowance may DO
claimed for wear and tear on farm
buildings Except the farmhouse),
fences, machinery, work animals, wag-
ons. tanks, windmills and other farm
equipment which u used In the con-
duct Of the farm.
As to autos and tractors, the cost Of
these 10 not an expense, although the
cost Of their upkssp is an allowable
deduction, II the machines are used ex-
clusivsly for farm purposes and not
for pleasure. Also, IN such cases, q de-
ductien for wear and tear is allowed.
Farm Lessee.
The loss Of Q growing crop is not q
proper deduction from income. mas
much AZ the value Of the crop had lot
been taken ints gross income. The
less Of q 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.
No deduction is allowed In the case
Of loss of animals raised on the farm,
but loss Is 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 be deducted as loss. for
the reason that when such products
are sold the shrinkage will be reflected
IN the selling price.
oalo VI Y ATWu ASo IAUs.
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
proats. 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 parcel Of land,
must also show any gains realized by
the sale.
The method Of figuring gains and
Losses on such transactions Is prescrib-
cd in the Income Tax regulations.
copies Of which may be secured from
Internal Revenue Collectors.
Ferms for Rsturna
The Internal Revenue Bureau has IS
sued IN improved Form 1040F for the
uss Of farmers. This form. together
with Form 1o4oA or 1910, will give the
farmer explicit information as to how
to properly figure his net income for
1919
There are two methods Of figuring q
farmers income tax return this year.
He may make his return on the basis
Of 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.
erual basis, which means computing
the receipts and expenses that pertain
to 10 taxable year. Guiding income
earned and expenses incurred In pre-
vious or succeeding years.