Imperial Valley press., 1942-02-02
Your Federal
Income Tax
INCOME OF FARNIERS

INCOME OF FARMERS
Farmers. which include livestock
ralscyS. fruit and truck growers
poultry raiserS, and operations ol
plantations and ranches, are AaoI'
for Federal income-taN returns
provided their income Is sufficient
10 require the filing of returns IN
manly. due to the reduction III the
credit for personal exemption, many
farmers will be liable for returns
and to the tan for the inst time
for the year l9+l.
Farmers may maintain their
records and file their returns
of income on either the cash
receipts and disbursements
basis or on the aCcrual basis of
accounting. \ consistent meth
cd must. however, be employ
ed. III Il cash basis is used,
Form l0i0F. schedule of Farm
Income and Expenses" is re
uuired 10 be filled out and fill
ed in conjunction with Form
Ie4O. Use of Form 1040F is Op-
ti0nal in the case of farmers
who report income on the ac-
Crual basis.
A farmers who reports income
on The cash receipts and diSburSe-
ments basis in which no inventories
TO determine profits are used
mus include in gross income for
81 la d sin ,4G
cash or the value OF merchandise
or other property received during
the taxable year from the sale Of
livestock or produce which We're
raised regardless of when raised
- the profits from the sale OF
any livestock or other items which
were purchased, and t3l gross i'll
come from all other sources.
Under the acCrual basis in which
Inventories are used TO determine
the profits. farmers gross profits
are aScertained by adding to the
inventory value of livestock and
produce on hand at the end of the
year the amount received from the
sale of livestock and produce, and
miscellaneous receipts Of income
during the year, and deducting
from this sum the inventory value
Of livestock and produce on hand
at the beginning of the year and
the cost Of livestock and produce
purchased during the year All live
stock. whether purchased or rails
ed. must be included in inventory
at their proper valuation. Livestock
acquired for draft breeding, or
dairy purposes and not for sale.
may be included in the inventory
instead of being treated as capi-
tai assets subject to depreciation
provided such practice is consist
emily followed
If farm produce is exchanged
for merchandise, groceries, or
the like, the market value of
the articles received in eX-
change is to be included in
/ gross income. The value of
farm products which are pro-
duced by a farmer and con-
su,ned by his family does not
constitute taxable income.
Rents received in crop shares
are TO be returned as income
as of the year in which the
crop shares are reduced to
money or the equivalent of
money. Proceeds of Insurance,
such as hail and fire insurance.
On growing crops, are required
TO be included in gross in
cone.
Amounts received as loans from
the Commodity Credit Corporation
may, at the option of the taxpayer
he considered as income and in
cluded in gross income for the tax
able year in which received. TIL
election made with respect to tn
calendar year 1899, or for the frs
year thereafter for which a re
turn is required to be filed, is bind
ing for all subsequent Years lmles
the Commissioner approves
change to different method of ac
counting. Amounts received unde
the Soil Conservation and DomcS
tic Allotment Act. as amended, tn
Price Adjustment Act of 1898, sec
ton 303 Of the Agricultural AG
justment Act. as amended, and tn
Sugar Act OF 1887 constitute taXabl
income to the recipients fer Fed
eral lnCOme-taX purposes.