The Maryville times. (Maryville, Tenn.) 1884-1944, 1920-03-03

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 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 SHOW
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
mails is not a deductible item.
Other farm expenses allowable are
the cost of minor repairs on buildings
tb,,t 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 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 a 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
iBgs, 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 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, de-
duction 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 of the crop had not
been taken into gross income. The
loss of a building or of machinery
through storm, lightning, food. 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 deductibIe 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 the selling price.
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 farm |
or ranch, or part Of a parcel of land |
must also show any gains realized by |
the SALE
The method Of figuring gains and !
losses on such transactions Is pre-
copies of which may be secured from
Internal Revenue Collectors.
Forms for Returns.
The IRternal Revenue Bureau has
issued an improved Form 1040F for
the use of farmers. This form, to-
gether with Form 1040A or 104O, 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-
yious or succeeding years.