Show HOW FARMERS SHOULD CO THEIR INCOMES INCOMES UNDER NOT AFFECTED BY INCOME TAX METHOD OF COMPUTING NET I 1 INCOME N C 0 M E EXPLAINED RETURNS FOR LAST YEAR MUST BE MADE TO INTERNAL INT ERNAL REV collectors BY mara J washington D C march 3 it if a farmer is a so BO fortunate as to have a net income of over a year in case he is a bachelor or it if married he la Is subject to the income tax and nd under the law each individual must make return to the internal revenue collector of his district on or before the first day of march if he has a net income of or over 2500 tor for the ten months of 1913 while the interest of most farmers in this subject Is purely academic the department of agriculture has received inquiries indicating that some wish to know just what Is required of them under the new law the income tax law of october 3 1813 1913 places a tax of aclo 1 upon all net incomes of over with an additional tax on incomes of or more tho the first question arising in the minds of most people Is what con statutes utes a net income for a man receiving ceiling a regular salary or a business man with a good system of bookkeeping it la Is easy to determine whether or not his income Is taxable but tor for the farmer who aho receives no stated income and who often falls to keep accurate account of receipts ts and expenditures di it Is more difficult to calculate his net income in order that farmers may be posted on the income tax as it may concern them the following information has been furnished by the internal revenue bureau of the treasury department part ment la in general an income consists of amounts derived from salaries wages or compensation tor for personal service paid in any form also from professions business sales or dealings in property or from rents interests on bonds or mortgages dividends on OB stocks or other othel income from fro M investments these items constitute gross income from which there should be deducted the expenses of carrying on oa the business interest paid on indebtedness ted tod ness worthless debts charged off losses by fire storm or shipwreck not covered by insurance exhaustion wear and tear of property and any income upon which the income tax has already been deducted at the source source as tor for instance dividends on the stock of a corporation which has already paid the tax on oil its earnings the provisions regarding net incomes of apply only to unmarried persons or to married persons sot living with wife or husband A husband and wife lying together are entitled to an exemption of on their aggregate income this means that in case the wife has a separate income if this added to the husbands income amounts to the total Is subject to the tax or if the wife has no separate income the husbands in come is taxable only in case cage it tea reaches ae but a return must be all made it if the aggregate income of both Is for or the year 1913 1111 the joint exemption however would be 3 aou 1 13 in arriving at his 91 income tha farmer should start with his gross income this would consist ai of any items of the kind above enumerate and especially all receipts from the sa sale Is of products ot of every lou from the farm this would induce all money received for produce and animals sold and tor for the wool anti and hides of animals slaughtered it if the wool and hides are sold but ha may inay deduct from these 1 lirums ans the amounts actually paid as purchase money tor for the animals sold or slaughtered ered during the year when the animals raised by the owner aro are sold or slaughtered however their value should not be deducted ducted le from the gross income there should be deducted amounts of money actually paid as expenses for operating the farm and producing the farm products uc ts lye ive stock etc this would in elude clude hired farm labor farm supplies sup plies purchased that are necessary to carry on the business and not an investment invest ment that represents principal etc expenses for repairs on farm property may be deducted provided the amount deducted does not exceed the amount spent for such repairs during the year for which the return is made the cost of replacing tools or machinery may also be deducted to the extent that the cost of the now articles does not exceed the value of the old no deduction may be made tor for the cost coat of additional farm machinery but credit may be allowed for the annual depreciation in the value of such machinery clil nery for example it if a machine cost and Is regarded as good tor for ten years eer service vice the annual depreciation would be 10 and a deduction of 10 each year could be made on this account as part of the expense of operating the farm the expense of supporting the family however can not be deducted from the gross income among items for which credit Is not allowed are eap exp expense ense tor for medical attendance fire insurance on oil dwelling store accod accounts nta family supplies wages of domestic servants and cost of board room or house rent for family or personal use in case au an individual owns his residence he cannot deduct tiie the estimated value of his rent but a tenant operating a rented farm as proprietor may deduct the rent of the farm as a part of the expense of his business farmers are not required to include in their income the produce taken from the farm and consumed by the family only produce sold off the farm is to be included A farmer Is not entitled to a deduction tor for his own labor or for expense of feeding live stock ile he may however deduct such items as cost of fertilizer and other supplies and materials which are used up in the course of his operations the law provides that tor for the year 1913 the tv tir hhall be computed only I 1 on the net income tor for t the he ten tea months from march to december and that returns shall be made on the basis of 0 five months of the year therefore it if the net income tor for the last ten tell months of 1913 amounts tu 2500 or more a a return on form 1040 Is required for the ten months ot of 1913 every single person la Is allowed 2500 exemption and in the case of husband and wife lying iving together exemption in ia computing the net income for this period deductions should be made for only five sixths sixtus of the amounts properly allowable for the whole year returns for 1913 must be made by march I 1 ast 1st 13 t 1914 blanks for making returns tor for the income tax may be obtained from the collectors ot of internal revenue throughout the country or from the bureau of internal revenue of 0 the treasury department at washington D C in case of failure on the part of any one who la Is subject to the tax to file the return by the first of march the law fixes a penalty of 50 per cent of the amount of the tax assessed ard and 10 to 1000 tine fine in case of false or fraudulent return there is a penalty of per cent and 20 to 2000 alne aln and one years imprisonment or both the bureau of revenue is preparing regulations which may be obtained by interested persons on application to collector of internal revenue for the applicants district |