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Form 1096 and 1099 - information returns are used to report payments to 

 individuals of $600 or more in the course of your trade or business in any calendar 

 year for wages, interest or rent. Separate copies of Form 1099 are to be given to 

 each individual to whom you made payments which total $600 or more. 



If you are a member of a partnership then the partnership uses Form 1065 

 together with Schedule F and Form 1040. 



Tax 



One major change which affects farmers is an optional first year depreciation 

 allowance on new or used tangible personal property purchased after December 31, 1957, 

 with a useful life of _6 years or more . The additional allowance is 20 percent of 

 the cost (not reduced by salvage) and may be obtained only in the first tax year , 

 that a depreciation allowance is allowable on such property. The aggregate cost 

 upon which the additional allowance may be based may not exceed $10,000 on a separate 

 return and $20,000 on a joint return. The additional allowance may be taken even 

 though the property was not owned the full year . After taking this additional 

 allowance you may also take the regular depreciation to which you are entitled for 

 the year, computed after adjusting the basis of the property for the additional 

 depreciation allowance. The property must have been purchased. If part of the 

 basis of the property is determined by reference to the basis of other property 

 such as a non-taxable exchange, that part cannot be considered for the additional 

 allowance. If, for example, you are allowed $600 on an old tractor which you 

 trade in on a new $3,000 tractor only $2400 will qualify. 



Example 



On November 1, 1958 you bought a truck for $4,000. You estimate the useful 

 life at 10 years and a salvage value of $500. Your depreciation deduction on a 

 separate return, using the straight-line method, may be computed as follows, if 

 you so elect : 



20% of $4,000 $800.00 



107o of $2,700 ($4,000 less 800 less 500) 

 Depreciation for 2 months (2/12 x 270) 45.00 



Depreciation for 1958 on separate return $845.00 



For 1959 and later years if there are no other adjustments to the basis of 

 this property, your depreciation deduction would be $270. After figuring your 

 special depreciation allowance you can use the sum-of-the-years-digits or declining 

 balance method of depreciation, if you wish. 



Social Security Taxes 



You must file a return and pay a social security tax on your earnings as a 

 self-employed farmer even though you would not other^jise be required to file an 

 income tax return. The rate of tax is 3 3/8 percent of earning up to the maximum 

 of $4,200. (The rate increases after January 1, 1959 to 3 3/4 percent and the 

 maximum earnings are increased to $4,800). 



