Milford chronicle., 1920-02-27


thousands Of farmers throughout the
United States, and to answer them one
and all the Internal Revenue Bureau
has drawn up the following statement
to show Just what the ordinary farm
er must do in figuring his income
1t is pointed out by the Bureau that
returns and taxes are due on or be-
fore March 10, at the office OF the Col.
lector of Internal Revenue for the
district in which the farmer lives.
There is a penalty provided in the law
for delaying the return or payment
beyond that date.
Who Must File
The requirement of filing an income
tax return is a burden laid by law
squarely on the shoulders of farmers.
business men, and wage earuers
throughout the United States, who had
net income for 1919 sufficient to
bring them within the laws provis-
ions
An unmarried person must file a
return if he or she has an income of
$1,000 or over; and a married person
living with a wife tor husband) must
file il their joint net income was 81
600 or over. A widow or widower, or
married person living apart from
wife Cor husband) is classed as
single person.
This requirement is enforced even
though no tax is due. And if a tax
is due the entire tax. or at least one
fourth of it must be paid when the re-
turn is filed-not later than March
15.
Form 1040A is used for income of
not more than $4,000. Form 1040 for
income over $4,000, and Form 1040F
income is designed especially for far
mers, rangers, stock raisers, etc, and |
should be filed with either of the
above forms.
Branches of Farming
The term farm" as used in income /
tax includes stock farms, dairy farms,
poultry farms, fruit farms and truck .
farms, also plantations, ranches, and .
all land used for farming operations. I
Whether the owner OF the farm or a
tenant the person or firm operating
the farm is required to consider in
come tax liability on the annual
gains.
The farmer, the manufacturer, and
the merchant are engaged in business
so far as the income tax is concern
ed, and each must conform TO a sim
pie set of rules in figuring taxable in
come.
The revenue law defines gross in
come and provides what particular de-
ductions may be taken from the gross
income in arriving at the net income.
This method must be followed by ev-
cry farmer n
Gross Income
In gross income a farmer is reQuir-
ed to include "all gains, profits, and
income derived from the sale or ex-
change OF farm products whether pro-
duced on the farm or purchased and
resold." When he exchanges his pro ,
ducts for groceries, clothing or other {
articles he must include in his gross ,
income the value Of the articles re- I
ceived in exchange. A farmer who
let's out a farm on a crOp-share basis g
must report the cash received when +
the crops are sold. A farmer who /
lets out a farm on a cash rental basis I
and is paid in crops must report the i
exact cash rental agreed upon wheth- /
er or not the crops are disposed OF. [
Care must be taken in figuring gain J
from the sale of live stock. If the /
stock was previously purchased, its a
cost should be deducted from the sales
price to ascertain the gain unless the 4
inventory method is in use by the /
farmer. C
The entire amount received for an q
imals raised on the farm should be in a
cluded in gross income. G
In case a farmer sold any work an r
imals or farm machinery previously a
purchased there should be included in a
the gross income any gain realized. il
The cost thereof, reduced by the
amount of wear and tear sustained on h
such animals and machinery. is sub o
tracted from selling price to arrive b
at the profit
Defining Expenses Il
From his gross income a farmer is Il
allowed to charge OFF all of his nee d
essary expense in the conduct of the ?
farm during the year. These include u
costs Of putting in his crop, of caring
for his crop, and of harvesting and
In addition to these costs
he may deduct money spent for or -
iinary farm tools of short life bought y
Turing the year, such as shovels, ~
rakes, etc. Also, the cost of feed pur- ~ ~
chased for his live stock may be - -
treated as an expense in so far as a.
his cost represents actual outlay; ~
lut the value of his own products fed y
o animals is not deductible item. q;
If during the year the farmer pur- -
chased trees for the planting Of an .
or if be built or improved the ~
arm drainage, pulled stumps on the 20 20
arm, dug a well, erected a barn or - i,
lew fences, or expended money for uo uo
my other purpose that improved his a. a.
arm, such expenditures are not . ..
hargeahle against the income for the p.
-ear. There is a reason for this GU
which the farmer will readily under -
tand, and that is a person who makes nl IL
uch improvements is not spending II u!
is money but investing it in improve a
nents that he and his family may en- ga ia
Oy or will contribute to the benefit Of .S gu
is operations as well as bring ~ ~
lrger price if he should sell out. - =
The difference between the farmers W.
ross income and expenses is known az az
S his net income, which is the 1I' ~.
mount the farmer must consider, to- ~
ether with other income, in deter v"
lining whether or not an income-tax
eturn is required. po
1t should not be a difficult matter u ~
IT the farmer who has kept no books m .iI'
, figure up his net income. He gen VI
rally has record of what he marketed
n goods or cash and knows what he1
1pended in the way Of cash. -
The Cash Basis otE
There are two ways in which a pri