Agriculture
Tax Information
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Gregory J. Cook, EA, CPA+ Accredited Tax Advisor Past President Alabama Society of Enrolled Agents Past President Alabama Association of Accountants |
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We experienced severe droughts in many parts of the United States in 2006 and 2007. As a result of the droughts, many cattle, horse and other livestock farmers were forced to sell off parts of their herds prematurely and many crop growers received crop insurance.
Patronage Dividends - Agriculture
Tax Info
Do you know what to do with your
1099-PATR? If you buy farm supplies
through a cooperative, you may
receive income from the cooperative
in the form of patronage dividends.
If you sell your farm products
through a cooperative, you may
receive either patronage dividends
or a per-unit retain certificate,
explained later, from the
cooperative.
Cancellation of Debt - Agriculture
Tax Info
Have you had a portion of a loan
forgiven? If your debt is canceled
or forgiven, other than as a gift or
bequest to you, you must include the
canceled amount in gross income for
tax purposes.
Disaster Area Losses - Agriculture
Tax Info
Has your county been declared a
Federal Disaster Area? Special rules
apply to Presidentially declared
disaster area losses. A
Presidentially declared disaster is
a disaster that occurred in an area
declared by the President to be
eligible for federal assistance
under the Disaster Relief and
Emergency Assistance Act.
Net Operating Losses - Agriculture
Tax Info
Did you have a really bad year? If
your deductible loss from operating
your farm is more than your other
income for the year, you may have a
net operating loss (NOL). You may
also have an NOL if you had a
personal or business-related
casualty or theft loss that was more
than your income.
Crop Insurance and Crop Disaster
Payments - Agriculture Tax Info
Are these payments taxable? You must
include in income any crop insurance
proceeds you receive as the result
of crop damage. You generally
include them in the year you receive
them. Treat as crop insurance
proceeds the crop disaster payments
you receive from the federal
government as the result of
destruction or damage to crops, or
the inability to plant crops because
of drought, flood, or any other
natural disaster.
Farm Income Averaging - Agriculture
Tax Info
Is your profit greater than normal?
If you are engaged in a farming
business, you may be able to average
all or some of your current year's
farm income by shifting it to the 3
prior years (base years).
Prepaid Farm Expenses - Agriculture
Tax Info
Do you buy supplies in advance?
There may be a limit on your
deduction for prepaid farm supplies
if you use the cash method of
accounting to report your income and
expenses. This limit will not apply,
however, if you meet one of the
exceptions, described later.
Items Purchased for Resale -
Agriculture Tax Info
When do you deduct the cost of
livestock and other items? If you
use the cash method of accounting,
you can deduct the cost of livestock
and other items purchased for resale
in Part I of Schedule F in the year
of sale.
Soil and Water Conservation -
Agriculture Tax Info
Do you have an erosion problem? If
you are in the business of farming,
you can choose to currently deduct
your expenses for soil or water
conservation or for the prevention
of erosion of land used in farming.
Commodity Credit Corporation Loans -
Agriculture Tax Info
When does a loan become income?
Normally, you do not report loans
you receive as income, and you
report income from a crop for the
year you sell it. However, if you
pledge part or all of your
production to secure a CCC loan, you
can choose to treat the loan as if
it were a sale of the crop and
report the loan proceeds as income
for the year you receive them.
Sales Caused By Weather-Related
Condition - Agriculture Tax Info
How can you report the income? If
you sell more livestock, including
poultry, than you normally would in
a year because of a drought, flood,
or other weather-related condition,
you may be able to choose to
postpone reporting the gain from
selling the additional animals until
the next year.
Fuel and Road Use Tax - Agriculture
Tax Info
Are you paying too much fuel tax?
You may be eligible to claim a
credit or refund of excise taxes on
fuel used on a farm for farming
purposes. This applies if you are
the owner, tenant, or operator of a
farm.
National Tobacco Growers Settlement
Trust Payment - Agriculture Tax Info
Are my settlement payments taxable?
The National Tobacco Growers
Settlement Trust (Trust) is an
offshoot of the Master Settlement
Agreement (MSA) which was signed in
November 1998 to settle claims
brought by a majority of the states
against certain tobacco
manufacturers, to recover health
care costs associated with tobacco
use.
News and Articles from Bara Business Center
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Greg Cook on the Recovery Act ... The Recovery Act was passed by Congress and signed into law by President Obama on February 17, 2009. The purpose of the $787 billion Recovery package is to jump-start the economy to create and save jobs. The Act specifies appropriations for a wide range of federal programs, and increases or extends certain benefits under Medicaid, unemployment compensation, and nutrition assistance programs. The legislation also reduces individual and corporate income tax collections (to an extent), and makes a variety of other changes to tax laws.
This Act will have far reaching consequences and we will be dealing with it for years to come (at least until 2018). Twenty-eight different agencies – such as the Departments of Education; Health and Human Services; and Energy – have been allocated a portion of the $787 billion in Recovery funds. Each agency develops specific plans for how it will spend its Recovery Act funds. The agencies then award grants and contracts to state governments or, in some cases, directly to schools, hospitals, contractors, or other organizations. The agencies are required to file weekly financial reports on how they are spending the money and their specific activities related to Recovery funds. Read more about The Recovery Act  |
While Our Government Rolls the Dice with Deficit Spending ...
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