Tax Topics
Introduction
A brief introduction to agricultural tax issues
DownloadTaxability of CFAP Payments
The Coronavirus Food Assistance Program (CFAP) was established to provide financial assistance to agricultural producers who have suffered a five percent or greater price decline, or who had losses due to market supply chain disruptions due to COVID-19, and possibly face additional and significant marketing costs. This article is intended to cover the most common actions each CFAP recipient will need to take once the Form 1099 has been received.
DownloadInitial Information on ARP and Debt Relief
March 2021
DownloadKeepseagle Second Round Settlement Payment
All second round Keepseagle awardees must file a tax return. This factsheet gives a brief overview of what forms will be needed and how to fill it out.
DownloadKeepseagle Settlement
A brief statement about the Keepseagle Settlement
DownloadDisaster Losses and Related Tax Rules
Federal income tax regulations often provide disaster relief by allowing deduction for losses of both business-use and personal-use property. With the use of examples, this fact sheet describes losses to property, the process used to determine if you have a deductible loss, how insurance proceeds and cost share benefits are treated, and how to reconstruct records to document a loss.
DownloadWeather Related Sales of Livestock
When there are adverse consequences due to weather related sales of livestock, there are two provisions in the law to help producers. This fact sheet explains both provisions and how to use them, with examples of each.
DownloadTangible Property Regulations Using the De Minimis Safe Harbor
Farmers and ranchers (as well as other business operators) can make the annual election to deduct as a current business expense items that prior to 2014 would have been capitalized and depreciated over the item’s tax life. This discussion is intended to help farmers and ranchers to make an informed decision about whether or not to make the annual election to use the De Minimis Safe Harbor.
DownloadEmployment of Family Members
While the day-to-day human-relations components of managing family members in the farm/ranch operation will differ substantially from that of non-family labor, the focus of this fact sheet will address the income tax and regulatory aspects of employing family members.
DownloadFarm Losses versus Hobby Losses
Farmers Must Plan Ahead to Avoid Adverse Tax Consequences: Hobby loss rules are often misunderstood. This fact sheet helps clarify the IRS’s definition of a hobby and gives the guidelines they use in determining if the business is a hobby for tax purposes.
How Do the At-Risk Rules Apply to a Farm Business?
At-risk rules limit deductible losses to the amount that the producer could actually lose from an activity. This fact sheet explains what industries are included, how to determine how much is at risk, and how to increase or decrease that amount.
DownloadSelf-Employment Tax
In addition to income taxes, producers must pay self-employment taxes on their earnings. This fact sheet gives a good explanation of what self-employment taxes are, how to compute them, and why they must be paid. It also discusses husband and wife partnerships, amended returns, and gives several examples.
DownloadMaterially Participate in the Business to Avoid the Passive Activity Loss Rules
Passive Activity Loss Rules limit a producer’s ability to deduct losses. This fact sheet is intended to help producers recognize what is considered a “passive activity”, with examples, and explanations on how to materially participate in the business.
DownloadInvoluntary Conversion of Business Assets
This fact sheet helps producers understand how to report income tax when business property is converted into cash or other property because of condemnation, theft, seizure, destruction, etc.
DownloadStart-Up Costs
Specific IRS rules apply to expenses incurred before a business exists, or the "start-up costs". This fact sheet gives information about correct reporting of start-up costs for income tax purposes.
DownloadRelated Parties
Tax Payers need to be aware of potential income tax consequences when dealing with related parties in business transactions. This fact sheet describes five common tax issues with defined related parties.
DownloadOptional Method of Paying Self-Employment Tax
A self-employed individual must pay self-employment tax to receive social security benefits. This may be problematic for farmers who have low income or loss years. This fact sheet gives information about an option method of paying self-employment tax and how it related to social security benefits.
DownloadEstate and Gift Tax
Individuals may be subject to estate and gift taxes when there are large transfers of property, money or assets. This fact sheet gives information about estate and gift taxes and when they might be due.
DownloadFarm, Farming and Who's a Farmer for Tax Purposes
There are many important benefits to being considered a farmer for tax purposes. This fact sheet gives a good explanation and examples of farming, farmers, and farm. It also touches on agritourism.
DownloadFiling Dates and Estimated Tax Payments
This fact sheet helps to determine tax filing dates, penalties, and returns. This is useful in cash flow planning.
DownloadForm 1099 Information Returns
This fact sheet helps in understanding what to do when receiving or issuing a 1099 tax form. It gives a good description of each type of 1099 form and includes several examples.
DownloadSale of Business Property
This fact sheet shows how to report income tax when business assets are sold. It uses examples, with filled-in forms, to demonstrate how to properly account for the sale of business property.
DownloadLike-Kind Exchange (Trade) of Business Assets
This fact sheet focuses on correct income tax reporting when business property is traded. It uses many examples, with filled-in forms.
DownloadChoices for Your Farm Operating Loss
This fact sheet gives a general overview of dealing with a net operating loss (NOL). It gives loss situations and general strategies.
DownloadDepreciation Fact Sheets
Depreciation rules can be involved. This topic is broken into several related fact sheets.
- Depreciation: An Introduction
- Depreciation: Class Life
- Depreciation: Cost Recovery Methods and Options
- Depreciation: Special Rules on Pickups, SUVs, Other Autos and Listed Property
- Depreciation: Election to Expense Qualifying Assets (Section 179 Deduction)
- Depreciation: Bonus or Additional First-Year Depreciation (AFYD)
- Depreciation: Other Topics
- Depreciation: Alternative Minimum Tax Considerations
- Depreciating Your Home Office
- Depreciation and Expensing Options (updated 1/24/11)
SE Tax
This fact sheet and interactive excel worksheet attempt to give guidance for taking the self-employed health insurance deduction for 2010, since there is no formal worksheet for figuring the deduction.
- Reporting the Self-Employed Health Insurance Deduction for 2010
- Self-Employment Tax Reconciliation Calculator: An interactive excel worksheet
Alternative Minimum Tax
This fact sheet gives a basic explanation of the AMT, some examples of situations that cause taxpayers to pay it, and some planning techniques to minimize the impact of the AMT
DownloadNet Operating Losses
The concept of the NOL rules is quite simple. This fact sheet discusses the carrying rules, planning tips, and other NOL information.
DownloadLease vs. Purchase of Machinery
Leasing or purchasing of machinery and equipment represent alternative ways to acquire agricultural assets. This fact sheet addresses each and gives examples of making the lease vs. purchase decision.
DownloadEmployment of Family Members
The use of family labor can pose a number of challenges when sorting through regulations. This fact sheet addresses those issues.
DownloadFederal Tax Forms Used by Beginning Farmers and Ranchers
This fact sheet gives a brief description and information about each of the common tax forms encountered by Farmers and Ranchers when filing their annual income tax returns.
DownloadBasis
Basis measures an owner's investment in an asset and is important when figuring taxes on the sale of an asset. This fact sheet gives information and examples on calculating basis in different situations.
DownloadWhat is Farming? Does Reporting Matter?
Sometimes it is difficult to determine where farming activities end and non-farm activities begin. This fact sheet will address these issues as well as how income and expenses are reported.
DownloadConservation-Related Payments and Expenditures
This fact sheet identifies six types of conservation-related payments and expenditures and discusses how they are handled for income and self-employment tax purposes. It includes several examples and a summary table.
DownloadTime Value of Money
This fact sheet gives basic information on the concept of the Time Value of Money. It also gives examples of calculation, which is useful in both business and personal financial decision and investments.
DownloadWhat Are Deductible Business Expenses?
It is important to claim all legitimate business expenses on income taxes. This fact sheet gives an overview of which business expenses are deductible.
DownloadW-2s for Foreign Agricultural Workers
The IRS made an announcement in September 2011 clarifying the reporting requirements for employers of foreign agricultural workers. This fact sheet gives additional information about these requirements.
DownloadRural Estate Tax
Individuals need to plan for estate transfer, even if they think their estate may not be subject to federal or state estate taxes. This fact sheet gives basic information about estate taxes and steps to take to ensure an easy transfer of estate.
DownloadPrepaid Farm Expenses
The IRS allows qualified farmers and ranchers to deduct the cost of purchases made in one year but used in the next in the year the purchases are made. This fact sheet gives information and examples for farmers and ranchers to use this benefit.
DownloadFor more topics, visit related links
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