The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1944-03-03
YOUR FEDERAL
INCOME TAX
INCOME OF FARMERS

The income tax returns of farmers,
including livestock raisers, fruit and
truck growers, poultry raisers, and
operators Of plantations and ranches,
will be due on or before March Is,
1914.
Farmers may keep their records
and file their returns of income
either on the cash receipts and dis
bursements basis or on the accrual
basis of accounting. A consistent
method must, however, be employed.
If O cash basis is used, Form 1040F,
Schedule OF Farm Income and Ex-
penses," is required to be filled in
and filed along with Form 1O4O.
Use of Form 1040F is optional In the
case Of farmers who report income
on the accrual basis.
A farmer who reports income on
the cash receipts and disbursements
basis Gin which no inventories to
determine profits are used Unjust in
clude in gross income for the taxable
year I'd the amount of cash or the
value OF merchandise or other prop
erty received during the taxable
year from the sale Of livestock or
produce which was raised, regard
less Of when raised; (2) the profits
from the sale Of any livestock or
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 ca 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 (b) 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 pur-
chased during the year. All live.
stock, whether purchased or raised
must be included in inventory. Live
stock acquired for draft, breeding
or dairy purposes and not for sale,
may be included in the inventory
instead Of being treated as capital
assets subject to depreciation, pro-
vided such practice is consistently
followed.
If farm produce is exchanged for
merchandise, groceries, or the like,
the market value of the articles
received in exchange is to be in
cluded in gross income. The value
OF farm products which are pro-
duced by farmer and consumed by
his family does not constitute tax
able income. Rents received in crop
shares are to be reported 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 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,
he 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 Commissioner
approves a change to a different
method of accounting. Amounts re-
ceived under the Soil Conservation
and Domestic Allotment Act, as
amended, the Price Adjustment Act
OF 1898. section 303 Of the Agricul-
tural Adjustment Act as amended,
and the Sugar Act of 1897 con-
sutute taxable income to the re-
cipients for Federal income tax pur-
poses.