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12 The Canadian Statesman..Bowmanville, April 14, 1976 Section Two ny aoinnManuel, tLiA. FARMING LOSSES The deduction of farm losses from other types of income can take two forms. They may be fully deductible to a farmer whose major source of income is farming, (or a combination of farming and some other xelated source), or restricted in the case of a person whose major source of income is not farming. The latter case applies to the "hobby" or "gentlemen" farmer, and only to a potentially profitable farming operation. Determining the "major source" of income is the first step. In a particular year, a farm may lose money, yet it may stili have been the major source" in ternis of effort and time devoted ..o it. A farmer who selîs one farmi, taking back a mortgage and buys another with a mortgage...... may show heavy losses on his new farm after deducting interest, and it could appear that his major source of income was the interest from the old farm, but this is not usually'the case, as in theory one would offset the other. The legitimate farmer need have no fear of losing his deduction usuaily. Ifthe major' source of incoume is farming or a combination of farming and some other source, losses may be applied in two ways. They may be deducted from other inicome in the year, carried back to the previous year's return, and any excess carried forward for a maximum of 5 years, or they maybe used to reduce each of the -previous four years using an averaging formula. If the mhajor source of income i- not farming or a combination of farmaing and some other source, losses may not be fully deductible. In the year of, the loss, a deduction may be taken for ail of the first $2,500 and haif of the next $5,000, meaning a total de- duction of flot more than $5,000. The excess is called a Restricted Farm Loss and mnay be carried back one year and forward five years, but oniy against farming income f in those years. This precludes the hoilbby farmer from de- ducting ai! his losses unless the farmn eventually becomes profitable. The hobby farmer faces one further obstacle. He must establish that hie is in the business of farming. Often, S the department will try to argue that a farmn is merely a summer residence with per- haps, for example, some horses for personal' amuse- menInfJ,1 such a case, unless there_ isa reasonable expecta- _1 U tin f rfitany losses woud be diallowd entrely, A pr-iefarmer mwh o îis coninaly ddutig osses Reg ula r $2.4,9 ta $3.69 c:ould therefore be challenged Assortment includes standar as to whether in1 fact there was ever a reasonable expectation Super-Lastic tires plus 20 x 1. of profit. Trac tion Tread and Red Line Finaily, there is the situa- Blackwall Endrick 20 x 2.12 tion where a, person owns land and rents it out to a farmner. Tread and 27 x 11/4" Gum Wal This is not considered farm- ing, and losses are not considered farming losses. They may qualify as rental losses, but if the land is vacant, even this is defeated. deductible, but must be added to the cumulative cost of the lard to be applied to anyReur$19ta1 future capital gain or loss Long-Iasting tubes made ofd whe7n the land is sold. Thus, ily 12ý of the loss will be quality but»l rubber. Availatý applied at some future date, . standard and hi-rise bicycle tir, since only 1/2 of any gain will be taxed. N extý week: April 3th deadline KENDAL (Intended for Iast week) Uited Church Women last UntrtChrh shw.Te xtra Sa vings ci guest speakers w ere Rev. and - Mrs. Floyd Howlett, U.C..7c s missionaries furlough fromn the wveekýend at their cottage and attended church Sunday moürning in Kendal. Rev. G. Montgomery's, message Sunday morning was 'A Lenton Confession' taken from Scripture reaig PGoae 62 - and Robïin Ibbotson sang a duet L There- Be Pence on -Earth' accý,uiopanied by Mrs. S r i e D Keith Wood. M.Leonard J F ,vs as reeeiig at the Co-,.We were remninded of the6 3 4 0 seilserviceon Palmn Sun- day eveing in Kendal Church SHAPE <et Automotive Wire-25 R. 19 Ga.2Reg$2.49 16-ga. reg. $1.79. $1.59 18-ga. reg. $1.59. $1.39 Low tension wire. 6-0z. Caulk 'Kwik-Sea ' lReg. $1.89 For bath and 'tie! W a ter p roo f; excellent adhesion. Force Cup 69eg. 990 With 51/2" cup'. u now and save for homne and cottage! Drye ýr/Styler IReg $1899 With styling handie, 2 combs, brush and curi curver. Save! Heating Pad Reg.$9 Fiv'e heat settings. Water-ne pellen t quilted print cover. rr Smart Shoppers! î andget valuable lus COUPONS 2518 mptê I Kettle 1 ~ Reg,$164 Stainless steel vaporizer- model. Automatic shut-off. Use your Ca nain Tr CARD R. W, JOHNSONENRPIS LIMITED 160 C:hurch Str1.eet Bowma vll M M STORE OURS Mona;ay, Tuesday, Wednesday, Thursday, Saturday 8:30 a.m. to 6:O00p. m. Frîday 8:30 a.m. to9:00Op.m., Rubber Solaray Hair Top Quality Toastess ý 1