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taxmap/pubs/p225-005.htm#TXMP5f0bd57e Chapter 3 Farm Income

Farm Income

taxmap/pubs/p225-005.htm#TXMP1026b29e What's New

taxmap/pubs/p225-005.htm#TXMP41e1dea6
Addition to small watershed programs.

The Conservation Security Program has been added to the list of small watershed programs. You may be able to exclude cost-share payments you receive from this program. For more information, see Cost-Sharing Exclusion (Improvements), later.

Introduction

You may receive income from many sources. You must report the income on your tax return, unless it is excluded by law. Where you report the income depends on its source.

This chapter discusses farm income you report on Schedule F (Form 1040). For information on where to report other income, see the instructions for Form 1040.

taxmap/pubs/p225-005.htm#TXMP52c90b9d Accounting method.

The rules discussed in this chapter assume you use the cash method of accounting. Under the cash method, you generally include an item of income in gross income when you receive it. See Cash Method in chapter 2.

If you use an accrual method of accounting, different rules may apply to your situation. See Accrual Method in chapter 2.

Useful items

You may want to see:

See chapter 17 for information about getting publications and forms.

taxmap/pubs/p225-005.htm#TXMP45868843 Schedule F

Schedule F

Report your farm income on Schedule F (Form 1040). Use this schedule to figure the net profit or loss from regular farming operations.

Income from farming reported on Schedule F (Form 1040) includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. It also includes income from the sale of crop shares if you materially participate in producing the crop. See Rents (Including Crop Shares), later.

Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming.

Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets.

• Land.
• Depreciable farm equipment.
• Buildings and structures.
• Livestock held for draft, breeding, sport, or dairy purposes.

Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11.

Previous Page:  Publication 225 - Farmer's Tax Guide - Accounting Methods Next Page:  Publication 225 - Farmer's Tax Guide - Sales of Farm Products Use     to find additional instances of index items.