The Holbrook news., 1920-03-05
FARMERS INCOME
 SUBJECT TO TAX
Gains for 1919 Must Be Figured Under U. S. LaW-Returns
 Due March 15.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be Deducted-speeial Form for Farm Income-cash or AecruaI
 Basis for Computing.

A farmer, shopkeeper, or tradesman must figure up his net income for 1919; and if 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 i lector of internal revenue by March 15.
 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 duced on the farm or purchased and resold.
 Farm Expenses.
 From his gross income a farmer is allowed to charge off 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 as an expense in so far as this cost represents actual outlay, but the value of his own products fed to ami mals is not a 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, all the productive labor is a 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.
 Purchase of farm machinery, wag- ons, work animals, etc, also the cost of construction or extension of build ings, silos, fencing, etc, should be con-
 
 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 upkeep is an allowable deduction, if the machines are used ex- clusively for farm purposes and not for pleasure. Also, in such cases, a de- duction for wear and tear is allowed
 Farm Losses.
 The loss of a growing crop Is not a proper deduction from income, inas- much as the value of the crop had not been taken into gross income The loss of a-building or of machinery through storm, lightning, flood, etc, is 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 a loss is deductible from gross in come if 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 a loss. for the reason that when such products are sold the shrinkage will be reflected in tha callip0 rrioa
 Sale of Farms and Land.
 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 profits. All such gains constitute income and must be taken into the net income for the year.
 Any person who sold part of a 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 pre- scrlbed in the Income Tax regulations. copies of which may be secured from Internal Revenue Collectors.
 Forms for Returns.
 The Internal Revenue Bureau has issued an improved Form 1O4OF for the use of farmers. This form, to- gether with Form 104OA or 1O4O, will give the farmer explicit information as to how to properly figure his net income for 1919.
 There are two methods of figuring a 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 ac- crual basis, which means computing the receipts and expenses that pertain to the taxable year, excluding income earned and expenses incurred in pre- ViOus or succeeding years.