Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1920-06-26
DEV|SES TAX PLAN
ON FARM INCOMES
COMMITTEE OF IOWA FARM RU-
REAu FAvoRs NEW sYs-
TEN OF REPORTS.

APPROVED BY U. s.
TREASURY OFFICIALS
income Tax Reports SimpIified Un-
der Suggested System Inventory
System Of Reporting Income Held
TO Be Only Fair Method For Farm
ers-May Be Used Turnout Nation.
Ames, June 26.-The Iowa Farm
Bureau Federation named a COM
mtttee last winter to work out
changes in the form Of farm income
tax reports with George NJ. Fox, vice
president Of the fedora ton as chair
man.
After . thorough study Of the
matter. the report was framed and
taken to Washington by Mr.. Fox
and Ray A. Emmert Of Des Moines.
They were In session with treasury
officials for several days recently. as
reported at tho time in these col
ui,1ns. and made their first official
report "Wednesday this week at
Amss. Tho report follows:
The matter Of income tax as ap-
piled to all business has been one Of
great concern. We have come to
admit that 1t 10 not q bad way in
which to derive revenue for govern
mont expense. and . method which
likely will continue. irrespective OF
political changes.
] The method Of applying has caused
great deal OF dissatisraction. es-
pecially among farmers. A great
many did not keep books prior to
the enactment Of the income law Of
! 1919. and, unfortunately. when they
began to keep records the depart
Hnent Of internal revenue. together
1 with some OF the banks and some of
tho county agents encouraged them
I 10. report on the cash basis. They
did this without realizing or taking
into consideration tho endless
amount Of dissatisfaction and in
equalities Of taxation to which the
taxpayer became subject. The
American Farm Bureau Federation
10 undertaking to establish system
Of accounting for the farmer and
presenting the present inequalities
and irregularities before the internal
revenue department In IN effort to
secure Justice.
Your committee appointed for CON
sidsration Of ana action on income
tax problems have recently had a
conference with the treasury depart
msnt In Washington, D. a. In an eff
1or3 70 secure remedial rulings or
complained Of BY tho taxpayer.
AZ basis for securing q hearing
with the treasury department, the
committee submitted the brief pre-
viously prepared by . committee app
pointed BY tho Dallas County Farm
8ureau, Of which your chairman was
: member. and which brief was later
adopted BY the state and national
federation, ana upon its filing and
oral discusstsns with this committee,
e II accepted and approved in full
by the department and particularly
Is TO the showing that the present
cash basis" IL negotiable and gives
3tst causs for complaint.
= Treasury Wishes to Be Fair.
q In the conference with the revenue
department. We found that they are
eAir. All agreed that the Intention Of
The law was simply TO tax profits.
This one fact gives plenty Of latitude
In which to adjust all difficulties that
have arisen Under the application Of
the law.
No one win question. neither does
the department OF internal revenue
question, the fact, that where a tax
payer reporting on the cash basis
sells out his entire personal property,
that the entire amount Of sale neces-
.sarily DO considered az profit.
Any set rule to determine what
iamount 10 profit and what amount
Was on hand and exempt from taxa
ton ct the time the individual be-
came subject to tax II very hard to
determine ana can only be done ac-
,curlts)y by treating each case on Ito
merits.
avor the Inventory System.
Che committee II convinced that
she inventory system Of reporting In
como u the only true method Of as
;certaining aud reporting income or
PROFIT and securing proper deductions
and paying tax for the years III
which earned.
We are also satisfied that the de-
partment OF internal revenue il OF the
sane mind, altho they will not favor
ono method In preference to tho 9TH
ier. bat are free to admit that when q
farmer II once established on an in
ventory basis. OF reporting that all
the gross irregularities and iriequali-
ties. which are the great source Of
contention. are eliminated.
Change From cash to Inventory.
How to change from cash to In.
ventory was ono Of the more difficult
problems that have been presented to
the treasury department. for decision
md on which several rulings have
been made. Tho latest Of which 1920
1898 Q. D. al says that in changing
from cash to inventory only those
items many be used In the opening
inventory which wsrs purchased and
which had not been used as a de-
duction up to that TIME.
This ruling automatically imposes
Q tax on the total stock, grain, 6to.,