The Bluffton news. [volume] (Bluffton, Ohio) 1875-current, 1943-02-25
YOU AND YOUR
INCOME TAX

Following is one of a series of
articles issued by the Bureau of
Internal Revenue designed to help
clarity requirements of the 1919
Revenue Act for those who are
neio income tar payers.-EDIToR
INCOME FOR FARMERS
Farmers, which include livestock
raisers, fruit and truck growers,
poultry raisers, and operators of
plantations and ranches, are liable
for Federal income tax returns pro-
vided their income is sufficient to
require the filing of returns. Pri-
marily, due to the reduction in the
credit for personal exemption, many
farmers will be liable for returns
and to the tax for the first time for
the year 1912.
Farmers may maintain their
records and file their returns of in
come on either the cash receipts and
disbursements basis or on the ac-
crual basis of accounting. A consist
ent method must, however, be en-
ployed. If a cash basis is used,
Form 1040F, Schedule of Farm In
come and Expenses" is required to
be filled out and filed in conjunction
with Form 1040. Use of Form
1040F is optional in the case of
farmers who report income on the
accrual basis. A farmer who re-
ports income on the cash repeipts
and disbursements basis Tin which
no inventories to determine profits
are used) must include in gross in
come for the taxable year ~ the
amount of cash or the value of mer-
chandise or other property received
during the taxable year from the
sale of livestock or produce which
were raised, regardless of when
raised; (2) the profits from the sale
of any livestock or other items which
were purchased; and (3) gross in
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 inven-
tory value of livestock and produce
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 o.
livestock and produce purchased dur
ing the year. All livestock, whether
purchased or raised, must be in.
cluded in inventory at their proper
valuation. Livestock acquired fol
draft, breeding, or dairy purposes
and not for sale, may be included in
the inventory instead of being treat
ed as capital assets subject to de.
probation, provided such practice is
consistently followed.
If farm produce is exchanged fol
merchandise, groceries, or the like
the market value of the articles re-
ceived in exchange is to be included
in gross income. The value of farm
products which are produced by g
farmer and consumed by his family
does not constitute taxable income
Rents received in crop shares are tt
be returned as income as of the yeal
in which the crop shares are reduced
/ to money or the equivalent o.
money. Proceeds of insurance, sucf
as hail and fire insurance on grow
ing crops, are required to be includ
ed in gross income.
Amounts received as loans from
the Commodity Credit Corporation
may, at the option of the taxpayer
be considered as income and includ
ed in gross income. for the taxable
year in which received. The election
once made is binding for all subse
quent years unless the COMMISSIONS
approves a change to differen
method of accounting. Amounts re
ceived under the Soil Conservation
and Domestic Allotment Act, a
amended, the Price Adjustment Ac
Of 1888, section 303 of the Agricul
tural Adjustment Act, as amended
and the Sugar Act of 1887 consti
tute taxable income to the recipient
for Federal income tax purposes.
An adequate supply of burlap an