Elburn , Ill.
-- Farm machinery dealer Bob Houtz tilts back in a battered chair and tells of a sharp pickup in sales : `` We've sold four corn pickers since Labor Day and have good prospects for 10 more .
We sold only four pickers all last year '' .
Gus Ehlers , competitor of Mr. Houtz in this farm community , says his business since August 1 is running 50% above a year earlier .
`` Before then , my sales during much of the year had lagged behind 1960 by 20% '' , he says .
Though the sales gains these two dealers are experiencing are above average for their business , farm equipment sales are climbing in most rural areas .
Paradoxically , the sales rise is due in large measure to Government efforts to slash farm output .
Although the Administration's program cut crop acreage to the lowest point since 1934 , farmers , with the help of extra fertilizer and good weather , are getting such high yields per acre that many are being forced to buy new harvesting machines .
Fields of corn and some other crops in many cases are so dense that older equipment cannot handle them efficiently .
The higher price supports provided by the new legislation , together with rising prices for farm products , are pushing up farm income , making it possible for farmers to afford the new machinery .
Seven of the eight companies that turn out full lines of farm machinery say sales by their dealers since the start of August have shown gains averaging nearly 10% above last year .
`` In August our dealers sold 13% more farm machinery than a year earlier and in September retail sales were 14% higher than last year '' , says Mark V. Keeler , farm equipment vice president of International Harvester Co. .
For the year to date , sales of the company's farm equipment dealers still lag about 5% behind 1960 .
Two of three report gains
Among individual dealers questioned in nearly a score of states , two out of three report their sales since August 1 show sizable gains from a year earlier , with the increases ranging from 5% to 50% .
Not all sections are showing an upswing , however ; ;
the drought-seared North Central states are the most notable exceptions to the uptrend .
The significance of the pickup in farm machinery sales extends beyond the farm equipment industry .
The demand for farm machinery is regarded as a yardstick of rural buying generally .
Farmers spend more of their income on tractors and implements than on any other group of products .
More than 20 million people live on farms and they own a fourth of the nation's trucks , buy more gasoline than any other industry and provide a major market for home appliances , chemicals and other products .
Farmers are so eager for new machinery that they're haggling less over prices than they did a year ago , dealers report .
`` Farmers aren't as price conscious as last year so we can get more money on a sale '' , says Jack Martin , who sells J. I. Case tractors and implements in Sioux City , Iowa .
`` This morning , we allowed a farmer $600 on the old picker he traded in on a new $2,700 model .
Last year , we probably would have given him $700 for a comparable machine '' .
Mr. Martin sold 21 tractors in August ; ;
in August of 1960 , he sold seven .
Dealers' stocks down
With dealer stocks of new equipment averaging about 25% below a year ago , the affects of the rural recovery are being felt almost immediately by the country's farm equipment manufacturers .
For example , farm equipment shipments of International Harvester in August climbed about 5% above a year earlier , Mr. Keeler reports .
Tractor production at Massey-Ferguson , Ltd. , of Toronto in July and August rose to 2,418 units from 869 in the like period a year earlier , says John Staiger , vice president .
With the lower dealer inventories and the stepped-up demand some manufacturers believe there could be shortages of some implements .
Merritt D. Hill , Ford Motor Co. vice president , says his company is starting to get calls daily from dealers demanding immediate delivery or wanting earlier shipping dates on orders for corn pickers .
Except for a few months in late 1960 and early 1961 , retail farm equipment sales have trailed year-earlier levels since the latter part of 1959 .
The rise in sales last winter was checked when the Government's new feed grain program was adopted ; ;
the program resulted in a cutback of around 20% in planted acreage and , as a result , reduced the immediate need for machines .
Nearly all of the farm equipment manufacturers and dealers say the upturn in sales has resulted chiefly from the recent improvement in crop prospects .
Total farm output for this year is officially forecast at 129% of the 1947-49 average , three points higher than the July 1 estimate and exactly equal to the final figure for 1960 .
The Government also is aiding farmers' income prospects .
Agriculture Department economists estimate the Government this year will hand farmers $1.4 billion in special subsidies and incentive payments , well above the record $1.1 billion of 1958 and about double the $639 million of 1960 .
Price support loans may total another $1 billion this year .
With cash receipts from marketings expected to be slightly above 1960 , farmers' gross income is estimated at $39.5 billion , $1.5 billion above 1960's record high .
Net income may reach $12.7 billion , up $1 billion from 1960 and the highest since 1953 .
The Government reported last week that the index of prices received by farmers rose in the month ended at mid-September for the third consecutive month , reaching 242% of the 1910-14 average compared with 237% at mid-July .
Kennedy opposes any widespread relief from a High Court depletion ruling .
The Supreme Court decision in mid-1960 was in the case of a company making sewer pipe from clay which it mined .
The company , in figuring its taxable earnings , deducted a percentage of the revenue it received for its finished products .
Such `` depletion allowances '' , in the form of percentages of sales are authorized by tax law for specified raw materials producers using up their assets .
The High Court held that the company must apply its percentage allowance to the value of the raw materials removed from the ground , not to the revenue from finished products .
A measure passed by Congress just before adjourning softened the ruling's impact , on prior-year returns still under review , for clay-mining companies that make brick and tile products .
The measure allows such companies in those years to apply their mineral depletion allowances to 50% of the value of the finished products rather than the lower value of raw clay alone .
President Kennedy , in signing the relief measure into law , stressed he regarded it as an exception .
`` My approval of this bill should not be viewed as establishing a precedent for the enactment of similar legislation for other mineral industries '' , the President said .
Charitable deductions come in for closer scrutiny by the I.R.S. .
The Service announced that taxpayers making such claims may be called on to furnish a statement from the recipient organization showing the date , purpose , amount and other particulars of the contribution .
Requests for substantiation , the Service indicated , can be especially expected in cases where it suspects the donor received some material benefit in return , such as tickets to a show .
In such an instance , revenuers stressed , the deduction must be reduced by the value of the benefit received .
A rule on the Federal deductibility of state taxes is contested .
A realty corporation in Louisiana owed no tax , under Federal law , on its gain from the sale of property disposed of in line with a plan of liquidation .
Louisiana , however , collected an income tax on the profits from the sale .
The corporation , in filing its final Federal income return , claimed the state tax payment as a deductible expense , as permitted under U.S. tax law .
The Revenue Service disallowed the claim , invoking a law provision that generally bars deductions for expenses incurred in connection with what it said was tax-exempt income .
The Tax Court rejected this view .
It said the tax-freedom of the gain in this case stemmed not from the exempt status of the income but from a special rule on corporate liquidations .
The Tax Court decision and a similar earlier finding by the Ninth Circuit Court of Appeals challenges a year-old I.R.S. ruling on the subject .
The Service has not said what its next step will be .
Peace Corps volunteers are assured a tax benefit under the law creating the agency .
It provides that the $1,800 termination payment each cadet is to get , after serving a two-year hitch without pay , will be spread over both years , not taxed in its entirety at a possibly higher rate in the year received .
The owner of a public relations firm owed no income tax on payments he received from a client company and `` kicked back '' to the company's advertising manager , the Tax Court ruled .
The taxpayer testified that in order to retain the account he had to pad his invoices and pay the excess to the manager .
The Court upheld the taxpayer's contention that these `` kickbacks '' were not his income though they passed through his hands .
The Court limited its decision to the tax issue involved , commenting : `` It is not our province to pass judgment on the morality of the transaction '' .
A portable kerosene range designed for use aboard boats is sold with a special railing to keep it from moving with the motion of the vessel .
The Revenue Service said the addition of the attachment does not keep the range from coming under the Federal manufacturers' excise tax on household-type appliances .
Hiring the wife for one's company may win her tax-aided retirement income .
A spouse employed by a corporation her husband controls , for example , may be entitled to distributions under the company's pension plan as well as to her own Social Security coverage .
She would be taxed on the pensions when received , of course , but the company's contributions would be tax-free .
A frequent pitfall in this sort of arrangement , experts warn , is a tendency to pay the wife more than her job is worth and to set aside an excessive amount for her as retirement income .
In that event , they note , the Revenue Service might declare the pension plan is discriminatory and deny it tax privileges under the law .
Possible upshots : The company could be denied a deduction for its pension payments , or those payments for the wife and other employes could be ruled taxable to them in the year made .
State briefs : Voters in four counties containing and bordering Denver authorized the imposition of an additional 2% sales tax within that area .
Colorado has a 2% sales tax .
Denver itself collects a 1% sales tax which is to be absorbed in the higher area tax .
The Washington state supreme court ruled that the state's occupation tax applied to sales , made at cost to an oil company , by a wholly-owned subsidiary set up to purchase certain supplies without divulging the identity of the parent .
The state's occupation tax is computed on gross sales .
The court held that the tax applied to non-profit sales because the corporations realized economic benefits by doing business as two separate entities .
-- Consumer spending edged down in April after rising for two consecutive months , the Government reported .
The Commerce Department said seasonally adjusted sales of retail stores dropped to slightly under $18 billion in April , down 1% from the March level of more than $18.2 billion .
April sales also were 5% below those of April last year , when volume reached a record for any month , $18.9 billion ( see chart on Page One ) .
The seasonal adjustment takes into account such factors as Easter was on April 2 this year , two weeks earlier than in 1960 , and pre-Easter buying was pushed into March .
Commerce Department officials were inclined to explain the April sales decline as a reaction from a surge of consumer buying in March .
Adjusted sales that month were up a relatively steep 2.5% from those of the month before , which in turn were slightly higher than the January low of $17.8 billion .