The Challis messenger. (Challis, Idaho) 1912-current, 1920-03-10
FARMERS INCOME
!. 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.
dueted--speclal Form for Farm
lncome--Cash or Acerual =
Nh Basis for Computing. u

A farmer, shophceper, or trndesman
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, a COM
plctc return must be fled with the col
lector Of internal revenue by March 10.
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-
sluccd on the farm or purchased and
resold
Farm Expenses.
From his gross income farmer IL
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 SHOW
els. nkes, etc Also. the cost Of feed
purchased for his live stock may be
treated us an expense. In so far as
this cost represents actual outlay; but
the vnlue Of his own products fed to
animals Is not de,luctible 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 housed, gaso.
line for operating power and sundry
other expenses which were paid for In
cash.
As to hired help, oil the productive
labor is ,leductlble 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
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. sllos, fencing. etc, should be con-
sltl4red 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 and tractors, the cost of
these is not an expense, although the
cost OF their upkeer Is an allowable
deduction, II the machines are used ex-
ciusively for farm purposes and not
for pleasure. Also, IN such cases. a de-
ductlOn for wear and tear Is allowed.
Farm Losses.
The loss OF growing crop Is not a
proper deduction from income, mas
much as the value II the crop had lot
been taken into gross income. The
loss of building or Of machinery
through storm, lightning, flood, ETC.. ia
an allowable deduction, but care should
be used to ascertain the correct loss
sustained, us restricted by income tax
regulations.
No deduction IL allowed In the case
of loss Of animals raised on the farm,
bat loss Is deductlble 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. fol
the reason that when such products
are sold the shrlnkage will be reflected
In the selling price.
Sale Of Farms and Land.
The value Of agricultural lands ha,
been jumping during the past few
years. and during 1910 many owners
sold out part or all OF their lands at BIZ
profits. All such gains constitute IN
come and must be taken into the ne
income for the year.
ANY person who sol part of farm
or fanch. or part OF u pufcei or iant
must also show any gains realized b,
the sale.
The method OF figuring gains an,
losses on such transactions Is prescrlh
ed In the Income Tax regulation.
copies Of which may be secured iron
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau has Is
sued an improved Form 104OF for III
use Of farmers. This form. togethe
with Form l0iOA or 1910, will give tn
farmer explicit information as to no,
to properly figure his net income 10
1910.
There are two methods of figuring
farmers income tax return this yeal
He may make his return ON the basi
1T 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 he may make HIS return on the a,
crual basis, which means computin
the receipts and expenses that pertai
5 n fine taxable year. q. cluding incOu