Courier Democrat. (Langdon, N.D.) 1891-1920, 1920-03-11
FARMERS INCOME
SUBJECT TO TAX
Gains for 1919 Must Be Figured
Under u. S. l,aW-ReturnS
Due March Is.
LAND SALE PROFITS TAXABLE.
LAND SALE PROFITS TAXABLE.
Necessary Farm Expenses May Be
Deducted-SpeciaI Form for Farm
lncomc-Cash or Accrual
Basis for Computing.

lector Of internal revenue by March Is.
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, c%ultivating, 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 sc 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
fbnt not the dwelling house,, on fences,
wagons n farm machinery also bills
paid for h~orseShoeing, 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, %ditchlng, 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
ings, silos, fencing, etc, should be con-
sidered additional investments in the
farm and are not proper deductions
against income.
A reasonable allowance may be
ltllllCu 1O1 veal dlu ICdI I'll ldIu
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, 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, 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 the selling price.
Sale of Farms and Land.
The value Of agricultural lands ha,
been jumping during the past few
years, and during 1919 many owner.
| sold out part or all Of their lands a
big profits. All sue gains constitut,
income and must be taken into the ne
income for the year.
Any person who sold part of a farm
or ranch, OF part Of a parcel Of land
must also show any gains realized b,
the sale.
The method Of figuring gains an,
losses on such transactions ts pre-
scribed in the Income Tax regulations
copies of which may be secured iron
Internal Revenue Collectors.
Forms for Returns.
The Internal Revenue Bureau ha
issued an improved Form 1O40F 70
the use Of farmers. This form, tc
gether with Form 104OA or 1910, vii
give the farmer explicit informatio
as to how to properly figure his ne
income for 1919.
There are two methods of figuring
farmers income tax return this yea
He may make his return on the basi
OF the difference between the none
and goods received for lis product
and the cash paid out for actual ALLOW
able farm expenses within the yea
Or he may make his return on the a,
"~inl basis, which means computin
the receipts and expenses that pertal
10 the taxable ear, excluding lncoir
earned and expenses incurred IN pr
lIous or succeeding years.