Cottonwood chronicle. [volume] (Cottonwood, Idaho) 1917-current, 1920-03-12
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-
dueted-speeIaI Form for Farm
Ineome--cash or Acerual
Basis for Computing.

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A farmer, shopkeeper, or tradesman
must figure up his net income for 1919;
and IL the farm or business income
plus his other income was sufficient TO
require an income tax return, com
plete return must be filed with the col
lector of internal revenue by March 10.
A farmer should ascertain the gross
income of his farm by computing ali
gains derived from the 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 of all Of his neces-
sary expenses in the conduct of the
farm during the year These include
costs of planting. cultlvating. 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 as an expense. In so far as
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 house), 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. al the productive
labor Is 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 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-
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 cen
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, II the machines are used ex
clusively for farm purposes and no
for pleasure. Also, In such cases, de
duction for wear and tear is allowed.
Farm Losses.
The loss OF growing crop IL not I
proper deduction from income. mas
much as the value OF the crop had %
been taken into gross Income. Th'
loss OF building or OF machiner,
through storm. lightning. food. etc, Il
an allowable deduction, but care shoult
be used to ascertain the correct los
sustained, as restricted by income tn,
regulations.
No deduction is allowed In the cas-,
of loss of animals raised on the farm
but a 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 marke
prices cannot be deducted as loss, 70
the reason that when such product
are sold the shrinkage will be refecte'
in the selling price.
Sale Of Farms and Land.
The value Of agricultural lands ha
been jumping during the past fe,
years. and during 1919 many owner
sold out part or all of their lands at bi
profits. All such gains constitute In
come and must be taken into the ne
income for the year.
Amy person who sol part of farr
or ranch. or part of a parcel OF lane
must also show any gains realized b
the sale
The method of figuring gains an
losses on such transactions Is prescrit
ed In the Income Tax regulations
copies OF which may be secured iron
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has Is
sued an improved Form 1040F for tn
use of farmers. This form, togethe
with Form l040A or 1040. will give tn
farmer explicit information as to HOY
TO properly figure his net income 10
1919.
There are two methods Of figuring
farmers income tax return this year
He may make his return on the basi
Of the difference between the none
and goods received for his product
and the cash paid out for actual allow
able farm expenses within the yea
Or lac may make his return on the n
crual basis, which means computin
the receipts and expenses that pertai
TO the taxable year, excluding incom
earned and expenses Incurred In pr<