The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1943-03-02
YOUR INCOME
TAX
INCOME OF FARMERS

AANSVANAh1
Farmers, which include livestock
raisers, fruit and truck growers
poultry raisers, and operators OF
plantations and ranches, are liable
for Federal income tax, provided
their income Is sufiicient TO require
the filing Of returns. Primarily, due
TO the reduction IN the credit fOE
personal exemption, many farmers
will be liable for returns and TO the
tax for the FIRST time for the year
l042.
Farmers may maintain their rec
ords and file their returns Of In
come on either the cash receipts
and disbursements basis or on the
accrual basis Of accounting. A con-
sistent method must, however, be
employed. II O cash basis is used,
Form l04OF, Schedule Of Farm In
come and Expenses" Is required To
be filled out and fled In conjunction
with Form 1040. Use Of Form l040F
Is optional In the case OF farmers
who report income on the accrual
basis. A farmer who reports income
on the cash receipts and disburses
ments basis Tin which no inventories
10 determine profits are useO must
include In gross income for the tax
able year ~ the amount Of casf
or the value Of merchandise or otheI
property received during the taxable
year from the sale of livestock Of
produce which was raised, regard.
less Of when raised: (2) the profits
from the sale Of any livestock OF
other items which were purchased
and 90 gross income 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 In
ventory value Of livestock and prod
uce on hand at the end Of the year
the amount received from the sale
Of livestock and produce. and miscel-
laneous receipts Of income during
the year, and deducting from this
sum the inventory value Of livestock
and produce on hand at the Begin
ming Of the year and the cost Of
livestock and produce purchased
during the year. All livestock,
whether purchased or raised, must
be included In inventory at their
proper valuation. Livestock acquired
for draft. breeding, or dairy pur.
poses and not for sale, may be In
Guided in the inventory instead Of
being treated as capital assets sub
ject to depreciation, provided such
practice Is consistently followed.
II farm produce Is exchanged for
merchandise, groceries, or the like,
the market value Of the articles
received In exchange Is to be includ-
cd in gross income. The value OF
farm products which are produced
by q farmer and consumed by his
family does not constitute taxable
income. Rents received In crop
shares are 10 be returned as income
a. 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 in
surance on growing crops, are re-
CURED to be included in gross In
come.
Amounts received as loans from
the Commodity Credit Corporation
may, at the option OF the taxpayer,
be considered as income and INCLUDE
ed In gross income for the taxable
year IN which received. The cleo
ton once made Is binding for oil
subsequent years unless tho COM
missioner approves q change 70 q
different method Of accounting.
Amounts received under the Soil
Conservation and Domestic AllOt-
ment Act, as amended, the Price
Adjustment Act OF 1888. section sos
Of the Agricultural Adjustment Act
~ amended. and the Sugar Act Of
1887 eonetltate taxable Income 70
the recipients for federal income
tax purposes.