OCR Text |
Show fuel and oil used for farm work; repairs and maintenance of farm machinery; hired laborers and hired machines, and cost of commercial com-mercial fertilizers the benefit of which is of short duration. The cost of farm machinery, equipment and farm buildings; amounts am-ounts expended in the development o farms, orchards and ranches, as well as the amounts expended in the restoration of soil fertility pre-pararatory pre-pararatory to actual production of crops and the cost of liming soil to increase productiveness over a period of years, are capital expenditures. expen-ditures. Losses incurred in the operation of farms as business enterprises are deductible from gross income. IE livestock has been purciiased for any purpose, and afterwards dies from disease, eyposure or injury, in-jury, or is killed by order of the authorities of a State or the United States, the actual purchase price of such livestock, less any deprici. ation allowable as a deduction in respect of such perished livestock may be deducted as a loss if the loss is not compensated for any insurance in-surance or otherwise. If gross income is ascertained by the use of inventories, no deduction deduc-tion can be taken separately for livestock or products lost during the year. o n O O Farmers Liable For Federal Income Tax Many farmers will be liable for filing income tax returns and payment pay-ment of tax for the first time this year. The term "farmers" includes livestock raisers, fruit and truck growers, and operators of planta tions and ranches. Farmers may maintain their re-ords re-ords and file their returns of income in-come on either the cash receipts and disbursements basis or on the accrual basis of accounting. A consistent con-sistent method must, however, be employed. If a cash basis is used, Form 1040F, "Schedule of Farm Income and Expenses," is required to be filled out and filed in con-Junction con-Junction with Form 1040. Deductions from gross income may be made by farmers as necessary neces-sary expenses, all amounts expended expend-ed other than those constituting capital expenditures) m carrying on the business of farming. Deductions Deduc-tions for expenses include such items as cost of feeding and raising rais-ing livestock except the value of farm produce grown upon the farm and the labor of the taxpayer); cost of seed, minor repairs to farm buildings (other than the dwelling of the farmer); small tools used up in the course of a year or two |