Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Back Tax Help

2010 Tax Form 1040xHow Can I File 2011 TaxesFile Prior Years Tax ReturnsFree Tax Preparation MilitaryFederal Form 1040xFiling State Income TaxesState Of Louisiana Amended Return Form 1040xAmend Federal Tax ReturnFile Free State And Federal TaxesFiling State Tax ReturnHow To File 2010 Taxes LateIrs File 1040ezIrs Gov Forms 1040xH&r Block Key Code Free State Filing2010 Ez 1040 Form1040x Form 2011 TurbotaxHow Can I File My State Taxes For FreeHow Do I File My Taxes For 2012Free Federal And State Tax Filing 2012 OnlineFederal Tax Forms And State FormsState E File2012 Federal Income TaxFree E-file 2012 TaxesMyfree Taxes ComWhere To File My 2011 Tax ReturnAmended Tax Form2005 Tax PreparationState Tax FormsTurbotax 2005 Free Download2012 TaxFreestatetaxact.comFiling Past TaxesTax Deductions For College StudentsHow To Amend Your Tax Return Online1040ez FormTaxact 2011 Free DownloadIrs Tax Form 1040ez2012 TaxTaxes Unemployed2012 Amended Tax Return

Back Tax Help

Back tax help 3. Back tax help   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. Back tax help Form 4797. Back tax help Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. Back tax help Granting the right to remove deposits. Back tax help Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. Back tax help You must report the income from all the different sources on your tax return, unless it is excluded by law. Back tax help Where you report the income on your tax return depends on its source. Back tax help This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. Back tax help For information on where to report other income, see the Instructions for Form 1040, U. Back tax help S. Back tax help Individual Income Tax Return. Back tax help Accounting method. Back tax help   The rules discussed in this chapter assume you use the cash method of accounting. Back tax help Under the cash method, you generally include an item of income in gross income in the year you receive it. Back tax help See Cash Method in chapter 2. Back tax help   If you use an accrual method of accounting, different rules may apply to your situation. Back tax help See Accrual Method in chapter 2. Back tax help Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. Back tax help Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. Back tax help Use this schedule to figure the net profit or loss from regular farming operations. Back tax help Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Back tax help This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. Back tax help It also includes income from the sale of crop shares if you materially participate in producing the crop. Back tax help See Rents (Including Crop Shares) , later. Back tax help Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. Back tax help Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. Back tax help Land. Back tax help Depreciable farm equipment. Back tax help Buildings and structures. Back tax help Livestock held for draft, breeding, sport, or dairy purposes. Back tax help Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. Back tax help Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. Back tax help Sales of Farm Products Where to report. Back tax help    Table 3-1 shows where to report the sale of farm products on your tax return. Back tax help Schedule F. Back tax help   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. Back tax help This includes money and the fair market value of any property or services you receive. Back tax help When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). Back tax help See chapter 6 for information on the basis of assets. Back tax help You generally report these amounts on Schedule F for the year you receive payment. Back tax help Example. Back tax help In 2012, you bought 20 feeder calves for $11,000 for resale. Back tax help You sold them in 2013 for $21,000. Back tax help You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. Back tax help Form 4797. Back tax help   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. Back tax help In either case, you should always report these sales on Form 4797 instead of Schedule F. Back tax help See Livestock under Ordinary or Capital Gain or Loss in chapter 8. Back tax help Animals you do not hold primarily for sale are considered business assets of your farm. Back tax help Table 3-1. Back tax help Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. Back tax help   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. Back tax help This applies even if your agent pays you in a later year. Back tax help For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. Back tax help Sales Caused by Weather-Related Conditions If you sell or exchange 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 postpone reporting the gain from the additional animals until the next year. Back tax help You must meet all the following conditions to qualify. Back tax help Your principal trade or business is farming. Back tax help You use the cash method of accounting. Back tax help You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. Back tax help The weather-related condition caused an area to be designated as eligible for assistance by the federal government. Back tax help Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. Back tax help The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. Back tax help A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. Back tax help See Other Involuntary Conversions in chapter 11. Back tax help Usual business practice. Back tax help   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. Back tax help Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. Back tax help If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. Back tax help Connection with affected area. Back tax help   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. Back tax help However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. Back tax help This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. Back tax help Classes of livestock. Back tax help   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. Back tax help Do not separate animals into classes based on age, sex, or breed. Back tax help Amount to be postponed. Back tax help   Follow these steps to figure the amount of gain to be postponed for each class of animals. Back tax help Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. Back tax help For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. Back tax help Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. Back tax help Example. Back tax help You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. Back tax help As a result of drought, you sold 135 head during 2012. Back tax help You realized $70,200 from the sale. Back tax help On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. Back tax help The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. Back tax help How to postpone gain. Back tax help   To postpone gain, attach a statement to your tax return for the year of the sale. Back tax help The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. Back tax help A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). Back tax help Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. Back tax help A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. Back tax help The number of animals sold in each of the 3 preceding years. Back tax help The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. Back tax help The total number of animals sold and the number sold because of weather-related conditions during the tax year. Back tax help A computation, as described above, of the income to be postponed for each class of livestock. Back tax help   Generally, you must file the statement and the return by the due date of the return, including extensions. Back tax help However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. Back tax help For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). Back tax help Attach the statement to the amended return and write “Filed pursuant to section 301. Back tax help 9100-2” at the top of the amended return. Back tax help File the amended return at the same address you filed the original return. Back tax help Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. Back tax help Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. Back tax help However, if you materially participate in farming operations on the land, the rent is farm income. Back tax help See Landlord Participation in Farming in chapter 12. Back tax help Pasture income and rental. Back tax help   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. Back tax help You must enter it as Other income on Schedule F. Back tax help If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Back tax help Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. Back tax help It does not matter whether you use the cash method of accounting or an accrual method of accounting. Back tax help If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. Back tax help See Landlord Participation in Farming in chapter 12. Back tax help Report the rental income on Schedule F. Back tax help If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). Back tax help The income is not included in self-employment income. Back tax help Crop shares you use to feed livestock. Back tax help   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. Back tax help You must include the fair market value of the crop shares in income at that time. Back tax help You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. Back tax help Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. Back tax help See  chapter 12. Back tax help Crop shares you give to others (gift). Back tax help   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. Back tax help You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. Back tax help Example. Back tax help A tenant farmed part of your land under a crop-share arrangement. Back tax help The tenant harvested and delivered the crop in your name to an elevator company. Back tax help Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. Back tax help They sell their crop shares in the following year and the elevator company makes payments directly to your children. Back tax help In this situation, you are considered to have received rental income and then made a gift of that income. Back tax help You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. Back tax help Crop share loss. Back tax help   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. Back tax help See Publication 925 for information on these rules. Back tax help Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. Back tax help However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. Back tax help See Cost-Sharing Exclusion (Improvements) , later. Back tax help Report the agricultural program payment on the appropriate line of Schedule F, Part I. Back tax help Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. Back tax help However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. Back tax help Claim the deduction on Schedule F for the year of repayment or reduction. Back tax help Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. Back tax help However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. Back tax help You do not need approval from the IRS to adopt this method of reporting CCC loans. Back tax help Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. Back tax help However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. Back tax help For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. Back tax help Revenue Procedure 2008-52, 2008-36 I. Back tax help R. Back tax help B. Back tax help 587, is available at  www. Back tax help irs. Back tax help gov/irb/2008-36_IRB/ar09. Back tax help html. Back tax help You can request income tax withholding from CCC loan payments you receive. Back tax help Use Form W-4V, Voluntary Withholding Request. Back tax help See chapter 16 for information about ordering the form. Back tax help To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. Back tax help Attach a statement to your return showing the details of the loan. Back tax help You must file the statement and the return by the due date of the return, including extensions. Back tax help If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Back tax help Attach the statement to the amended return and write “Filed pursuant to section 301. Back tax help 9100-2” at the top of the return. Back tax help File the amended return at the same address you filed the original return. Back tax help When you make this election, the amount you report as income becomes your basis in the commodity. Back tax help See chapter 6 for information on the basis of assets. Back tax help If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. Back tax help If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. Back tax help If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. Back tax help If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. Back tax help Form 1099-A. Back tax help   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. Back tax help “CCC” should be shown in box 6. Back tax help The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. Back tax help Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. Back tax help If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. Back tax help Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. Back tax help Market gain should be reported as follows. Back tax help If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. Back tax help However, adjust the basis of the commodity for the amount of the market gain. Back tax help If you did not include the CCC loan in income in the year received, include the market gain in your income. Back tax help The following examples show how to report market gain. Back tax help Example 1. Back tax help Mike Green is a cotton farmer. Back tax help He uses the cash method of accounting and files his tax return on a calendar year basis. Back tax help He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. Back tax help In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. Back tax help 00 per pound). Back tax help In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. Back tax help 50 per pound (lower than the loan amount). Back tax help Later in 2013, he sold the cotton for $2,500. Back tax help The market gain on the redemption was $. Back tax help 50 ($2. Back tax help 00 – $1. Back tax help 50) per pound. Back tax help Mike realized total market gain of $500 ($. Back tax help 50 x 1,000 pounds). Back tax help How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. Back tax help Included CCC loan. Back tax help   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. Back tax help The $500 market gain is not recognized on the redemption. Back tax help He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Back tax help   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. Back tax help His gain from the sale is $1,000 ($2,500 – $1,500). Back tax help He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. Back tax help Excluded CCC loan. Back tax help   Mike has income of $500 from market gain in 2013. Back tax help He reports it on Schedule F, lines 4a and 4b. Back tax help His basis in the cotton is zero, so his gain from its sale is $2,500. Back tax help He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. Back tax help Example 2. Back tax help The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. Back tax help Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. Back tax help In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. Back tax help How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. Back tax help Included CCC loan. Back tax help   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. Back tax help The $500 market gain is not recognized on the redemption. Back tax help Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Back tax help   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. Back tax help Mike has no gain or loss on its sale to the cotton buyer for that amount. Back tax help Excluded CCC loan. Back tax help   As in Example 1, Mike has income of $500 from market gain in 2013. Back tax help He reports it on Schedule F, lines 4a and 4b. Back tax help His basis in the cotton is zero, so his gain from its sale is $1,500. Back tax help He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. Back tax help Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. Back tax help You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. Back tax help Cost-share payments you receive may qualify for the cost-sharing exclusion. Back tax help See Cost-Sharing Exclusion (Improvements) , later. Back tax help CRP payments are reported to you on Form 1099-G. Back tax help Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Back tax help See the instructions for Schedule SE (Form 1040). Back tax help Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. Back tax help You generally include them in the year you receive them. Back tax help 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. Back tax help You can request income tax withholding from crop disaster payments you receive from the federal government. Back tax help Use Form W-4V, Voluntary Withholding Request. Back tax help See chapter 16 for information about ordering the form. Back tax help Election to postpone reporting until the following year. Back tax help   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. Back tax help You use the cash method of accounting. Back tax help You receive the crop insurance proceeds in the same tax year the crops are damaged. Back tax help You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. Back tax help   Deferral is not permitted for proceeds received from revenue insurance policies. Back tax help   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. Back tax help Check the box on line 8c and attach a statement to your tax return. Back tax help The statement must include your name and address and contain the following information. Back tax help A statement that you are making an election under IRC section 451(d) and Regulations section 1. Back tax help 451-6. Back tax help The specific crop or crops physically destroyed or damaged. Back tax help A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. Back tax help The cause of the physical destruction or damage and the date or dates it occurred. Back tax help The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. Back tax help The name of each insurance carrier from whom you received payments. Back tax help   One election covers all crops representing a single trade or business. Back tax help If you have more than one farming business, make a separate election for each one. Back tax help For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. Back tax help   An election is binding for the year unless the IRS approves your request to change it. Back tax help To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. Back tax help Ogden Submission Processing Center P. Back tax help O. Back tax help Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. Back tax help These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. Back tax help They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. Back tax help Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. Back tax help You must include these benefits in income in the year you receive them. Back tax help You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. Back tax help Report the benefits on Schedule F, Part I, as agricultural program payments. Back tax help You can usually take a current deduction for the same amount as a feed expense. Back tax help Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. Back tax help A payment is any economic benefit you get as a result of an improvement. Back tax help However, this exclusion applies only to that part of a payment that meets all three of the following tests. Back tax help It was for a capital expense. Back tax help You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. Back tax help You must include the payment for a deductible expense in income, and you can take any offsetting deduction. Back tax help See chapter 5 for information on deducting soil and water conservation expenses. Back tax help It does not substantially increase your annual income from the property for which it is made. Back tax help An increase in annual income is substantial if it is more than the greater of the following amounts. Back tax help 10% of the average annual income derived from the affected property before receiving the improvement. Back tax help $2. Back tax help 50 times the number of affected acres. Back tax help The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Back tax help Qualifying programs. Back tax help   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. Back tax help The rural clean water program authorized by the Federal Water Pollution Control Act. Back tax help The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. Back tax help The water bank program authorized by the Water Bank Act. Back tax help The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. Back tax help The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. Back tax help The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. Back tax help The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. Back tax help Certain small watershed programs, listed later. Back tax help Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Back tax help Several state programs have been approved. Back tax help For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). Back tax help Small watershed programs. Back tax help   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. Back tax help The programs under the Watershed Protection and Flood Prevention Act. Back tax help The flood prevention projects under the Flood Control Act of 1944. Back tax help The Emergency Watershed Protection Program under the Flood Control Act of 1950. Back tax help Certain programs under the Colorado River Basin Salinity Control Act. Back tax help The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. Back tax help The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Back tax help The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Back tax help The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Back tax help The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Back tax help The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. Back tax help The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. Back tax help The Conservation Security Program authorized by the Food Security Act of 1985. Back tax help The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. Back tax help Income realized. Back tax help   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). Back tax help Value of the improvement. Back tax help   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. Back tax help The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. Back tax help Any government payments under a program not listed earlier. Back tax help Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. Back tax help Any government payment to you for rent or for your services. Back tax help The denominator of the fraction is the total cost of the improvement. Back tax help Excludable portion. Back tax help   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. Back tax help 10% of the prior average annual income from the affected acreage. Back tax help The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. Back tax help $2. Back tax help 50 times the number of affected acres. Back tax help The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. Back tax help You may need to consult your tax advisor for assistance. Back tax help Example. Back tax help One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. Back tax help The total cost of the improvement was $500,000. Back tax help The USDA paid $490,000. Back tax help You paid $10,000. Back tax help The value of the cost-sharing improvement is $15,000. Back tax help The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. Back tax help The excludable portion is the greater amount, $1,550. Back tax help You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. Back tax help   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. Back tax help Any payment excluded from income is not part of your basis. Back tax help In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. Back tax help   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. Back tax help How to report the exclusion. Back tax help   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. Back tax help The statement must include the following information. Back tax help The dollar amount of the cost funded by the government payment. Back tax help The value of the improvement. Back tax help The amount you are excluding. Back tax help   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. Back tax help Recapture. Back tax help   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. Back tax help In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. Back tax help You must report the recapture on Form 4797. Back tax help See Section 1255 property under Other Gains in chapter 9. Back tax help Electing not to exclude payments. Back tax help   You can elect not to exclude all or part of any payments you receive under these programs. Back tax help If you make this election for all of these payments, none of the above restrictions and rules apply. Back tax help You must make this election by the due date, including extensions, for filing your return. Back tax help In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. Back tax help If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Back tax help Write “Filed pursuant to section 301. Back tax help 9100-2” at the top of the amended return and file it at the same address you filed the original return. Back tax help Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. Back tax help You must include these payments on Schedule F, lines 4a and 4b. Back tax help The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. Back tax help You must include these payments on Schedule F, lines 6a and 6b. Back tax help The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. Back tax help Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. Back tax help As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. Back tax help If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Back tax help If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Back tax help Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. Back tax help Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. Back tax help The gain or loss is capital or ordinary depending on how you used the quota. Back tax help See Capital or ordinary gain or loss , later. Back tax help Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. Back tax help Adjusted basis. Back tax help   The adjusted basis of your quota is determined differently depending on how you obtained the quota. Back tax help The basis of a quota derived from an original grant by the federal government is zero. Back tax help The basis of a purchased quota is the purchase price. Back tax help The basis of a quota received as a gift is generally the same as the donor's basis. Back tax help However, under certain circumstances, the basis is increased by the amount of gift taxes paid. Back tax help If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. Back tax help The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. Back tax help Reduction of basis. Back tax help   You are required to reduce the basis of your tobacco quota by the following amounts. Back tax help Deductions you took for amortization, depletion, or depreciation. Back tax help Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. Back tax help The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). Back tax help Amount treated as interest. Back tax help   You must reduce your tobacco quota buyout program payment by the amount treated as interest. Back tax help The interest is reportable as ordinary income. Back tax help If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. Back tax help   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. Back tax help You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. Back tax help For more information, see Notice 2005-57, 2005-32 I. Back tax help R. Back tax help B. Back tax help 267, available at www. Back tax help irs. Back tax help gov/irb/2005-32_IRB/ar13. Back tax help html. Back tax help Installment method. Back tax help   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. Back tax help Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. Back tax help See chapter 10 for more information. Back tax help Capital or ordinary gain or loss. Back tax help   Whether your gain or loss is ordinary or capital depends on how you used the quota. Back tax help Quota used in the trade or business of farming. Back tax help   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. Back tax help See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. Back tax help Quota held for investment. Back tax help   If you held the quota for investment purposes, any gain or loss is capital gain or loss. Back tax help The same result also applies if you held the quota for the production of income, though not connected with a trade or business. Back tax help Gain treated as ordinary income. Back tax help   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. Back tax help Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. Back tax help The cost of acquiring a quota. Back tax help Amounts for amortization, depletion, or depreciation. Back tax help Amounts to reflect a reduction in the quota pounds. Back tax help   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. Back tax help Self-employment income. Back tax help   The tobacco quota buyout payments are not self-employment income. Back tax help Income averaging for farmers. Back tax help   The gain or loss resulting from the quota payments does not qualify for income averaging. Back tax help A tobacco quota is considered an interest in land. Back tax help Income averaging is not available for gain or loss arising from the sale or other disposition of land. Back tax help Involuntary conversion. Back tax help   The buyout of the tobacco quota is not an involuntary conversion. Back tax help Form 1099-S. Back tax help   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. Back tax help The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. Back tax help Like-kind exchange of quota. Back tax help   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. Back tax help See Notice 2005-57 for more information. Back tax help Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. Back tax help Taxation of payments to tobacco growers. Back tax help   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. Back tax help Individuals will generally report the payments as an Agricultural program payment on Schedule F. Back tax help If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. Back tax help Self-employment income. Back tax help   Payments to growers generally represent self-employment income. Back tax help If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. Back tax help Income averaging for farmers. Back tax help   Payments to growers who are individuals qualify for farm income averaging. Back tax help Form 1099-G. Back tax help   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. Back tax help Other Payments You must include most other government program payments in income. Back tax help Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. Back tax help How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. Back tax help Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. Back tax help You must also capitalize the full cost of the improvement. Back tax help Since you have included the payments in income, they do not reduce your basis. Back tax help However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. Back tax help National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. Back tax help You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. Back tax help If you produce a tobacco crop, report the payments as income from farming on your Schedule F. Back tax help If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. Back tax help Payment to More Than One Person The USDA reports program payments to the IRS. Back tax help It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). Back tax help If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. Back tax help You should file Form 1099-G to report the identity of the actual recipient to the IRS. Back tax help You should also give this information to the recipient. Back tax help You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. Back tax help Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. Back tax help However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. Back tax help See chapter 16 for information about ordering Form 1099-G. Back tax help Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). Back tax help 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. Back tax help Form 1099-PATR. Back tax help   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. Back tax help Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. Back tax help For information on the alternative minimum tax, see the Instructions for Form 6251. Back tax help Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. Back tax help They include the following items. Back tax help Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). Back tax help The stated dollar value of qualified written notices of allocation. Back tax help The fair market value of other property. Back tax help Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. Back tax help You must reduce the cost or other basis of these items by the amount of such patronage dividends received. Back tax help Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. Back tax help If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. Back tax help Qualified written notice of allocation. Back tax help   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. Back tax help A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. Back tax help The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. Back tax help You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. Back tax help Signing and giving a written agreement to the cooperative. Back tax help Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. Back tax help The cooperative must notify you in writing of this bylaw and give you a copy. Back tax help Endorsing and cashing a qualified check paid as part of the same patronage dividend. Back tax help You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. Back tax help Qualified check. Back tax help   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. Back tax help It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. Back tax help It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. Back tax help Loss on redemption. Back tax help   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. Back tax help The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. Back tax help Nonqualified notice of allocation. Back tax help   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. Back tax help Your basis in the notice is zero. Back tax help You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. Back tax help Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. Back tax help However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. Back tax help   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. Back tax help For example, if it represents interest income, report it on your return as interest. Back tax help Buying or selling capital assets or depreciable property. Back tax help   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. Back tax help You must, however, reduce the basis of these assets by the dividends. Back tax help This reduction is taken into account as of the first day of the tax year in which the dividends are received. Back tax help If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. Back tax help   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. Back tax help Example. Back tax help On July 1, 2012, Mr. Back tax help Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. Back tax help The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). Back tax help Mr. Back tax help Brown files his return on a calendar year basis. Back tax help For 2012, he claimed a depreciation deduction of $311, using the 10. Back tax help 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). Back tax help On July 2, 2013, the cooperative association paid Mr. Back tax help Brown a $300 cash patronage dividend for buying the machine. Back tax help Mr. Back tax help Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. Back tax help Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. Back tax help 38% × 1. Back tax help 5 = 23. Back tax help 07% Depreciation deduction for 2013 ($2,289 × 23. Back tax help 07%) $528 Exceptions. Back tax help   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. Back tax help If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. Back tax help If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). Back tax help   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. Back tax help Personal purchases. Back tax help   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). Back tax help This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. Back tax help Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. Back tax help A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. Back tax help These allocations can be paid in money, other property, or qualified certificates. Back tax help Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. Back tax help Qualified certificates. Back tax help   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. Back tax help The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. Back tax help If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. Back tax help Nonqualified certificates. Back tax help   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. Back tax help Your basis in the certificate is zero. Back tax help You must include in income any amount you receive from its sale, redemption, or other disposition. Back tax help Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. Back tax help Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. Back tax help For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Back tax help General Rule Generally, 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. Back tax help Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. Back tax help It is excluded from taxable income (see Exclusions , later). Back tax help Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. Back tax help If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. Back tax help Election to defer income from discharge of indebtedness. Back tax help   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. Back tax help Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. Back tax help See IRC section 108(i) and Publication 4681 for details. Back tax help Form 1099-C. Back tax help   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Back tax help The amount of debt canceled is shown in box 2. Back tax help Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Back tax help These exceptions apply before the exclusions discussed below. Back tax help Price reduced after purchase. Back tax help   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. Back tax help Reduce your basis in the property by the amount of the reduction in the debt. Back tax help The rules that apply to bankruptcy and insolvency are explained below under Exclusions . Back tax help Deductible debt. Back tax help   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. Back tax help This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. Back tax help Example. Back tax help You get accounting services for your farm on credit. Back tax help Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. Back tax help Your accountant forgives part of the amount you owe for the accounting services. Back tax help How you treat the canceled debt depends on your method of accounting. Back tax help Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Back tax help Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Back tax help Exclusions Do not include canceled debt in income in the following situations. Back tax help The cancellation takes place in a bankruptcy case under title 11 of the U. Back tax help S. Back tax help Code. Back tax help The cancellation takes place when you are insolvent. Back tax help The canceled debt is a qualified farm debt. Back tax help The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). Back tax help See Publication 334, Tax Guide for Small Business, chapter 5. Back tax help The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. Back tax help The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. Back tax help If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. Back tax help If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. Back tax help See Form 982 , later, for information on how to claim an exclusion for a canceled debt. Back tax help Debt. Back tax help   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. Back tax help Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. Back tax help Bankruptcy. Back tax help   A bankruptcy case is a case under title 11 of the U. Back tax help S. Back tax help Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. Back tax help   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. Back tax help Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . Back tax help Insolvency. Back tax help   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. Back tax help   You can exclude canceled debt from gross income up to the amount by which you are insolvent. Back tax help If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. Back tax help Otherwise, you include the difference in gross income. Back tax help Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . Back tax help You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. Back tax help Example. Back tax help You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. Back tax help Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. Back tax help Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). Back tax help You can exclude this amount from income. Back tax help The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. Back tax help If not, you must include it in income. Back tax help Reduction of tax attributes. Back tax help   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. Back tax help Order of reduction. Back tax help   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. Back tax help Net operating loss (NOL). Back tax help Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. Back tax help Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. Back tax help General business credit carryover. Back tax help Reduce the credit carryover to or from the tax year of the debt cancellation. Back tax help Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. Back tax help Minimum tax credit. Back tax help Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. Back tax help Reduce the credit 331/3 cents for each dollar of excluded canceled debt. Back tax help Capital loss. Back tax help Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. Back tax help Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. Back tax help Basis. Back tax help Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. Back tax help Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. Back tax help Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. Back tax help Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. Back tax help Inventory and accounts and notes receivable. Back tax help Other property. Back tax help Reduce the basis one dollar for each dollar of excluded canceled debt. Back tax help However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. Back tax help For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. Back tax help 1017-1(b)(2). Back tax help Also see Electing to reduce the basis of depreciable property
Print - Click this link to Print this page

SOI Tax Stats - Exempt Organizations' Unrelated Business Income (UBI) Tax Statistics

Return to Tax Stats home page

Snapshot of Unrelated Business Income Tax Statistics

Because tax-exempt organizations generally operate for charitable or other beneficial purposes, most income that they receive is exempt from tax under the Internal Revenue Code. Tax-exempt organizations are permitted to engage in income-producing activities that are considered to be unrelated to their exempt purposes. However, income from these activities may be taxable. This study measures income, deductions, and tax imposed on tax-exempt corporate and trust entities' unrelated business income. Data are compiled from Form 990-T, Exempt Organization Business Income Tax Return.

Statistical Tables    Publications and Papers    Other IRS Data
 

For information about selected terms and concepts, a description of the data sources and limitations, and links to recent revisions of Form 990-T, please visit the Exempt Organizations' Unrelated Business Income (UBI) Tax Metadata page.


Statistical Tables

The following are available as Microsoft Excel® files. A free Excel viewer is available for download, if needed.

All Organizations:
Number of Returns, Gross UBI, Total Deductions, and Tax Items
 
Classified by: Internal Revenue Code Section
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992
 
Classified by: Size of Gross UBI
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992
 
Classified by: Size of Unrelated Business Taxable Income or Deficit
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992
 
Classified by: Primary Unrelated Business Activity or Industrial Grouping
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992
 
Sources of Gross UBI
Classified by: Size of Gross UBI
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992
 
Types of Deductions
Classified by: Size of Gross UBI
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992

 
Organizations with Positive Unrelated Business Taxable Income:
Number of Returns, Gross UBI, Total Deductions, and Tax Items
Classified by: Type of Entity and Size of Gross UBI
Tax Years: 2010  2009  2008  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1995  1994  1993  1992

 
Section 501(c)(3) Organizations Only:
Classified by: Primary Unrelated Business Activity or Industrial Grouping
Tax Years: 2009  2008  2007  2006

 
Historical Table:
Table 16: Nonprofit Charitable Organization and Domestic Private Foundation Information Returns, and Exempt Organization Business Income Tax Returns: Selected Financial Data, Expanded
Published as: SOI Bulletin Historical Table 16


Projections
For selected tax returns, including the Form 990-T, IRS's Office of Research produces annual forecasts of the number of returns that will be filed in future years.
      Projections of Returns to be Filed in Future Calendar Years

(Back to top)

Publications and Papers

The following are available as PDF files. A free Adobe® reader is available for download, if needed.

(Back to top)

Other IRS Data and Related Links

For tax administration data on this topic, as well as other types of taxes, choose from the links below.

(Back to top)

Return to Tax Stats home page

Page Last Reviewed or Updated: 27-Feb-2014

The Back Tax Help

Back tax help Publication 527 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSale of main home used as rental property. Back tax help Tax-free exchange of rental property occasionally used for personal purposes. Back tax help Ordering forms and publications. Back tax help Tax questions. Back tax help Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 527, such as legislation enacted after it was published, go to www. Back tax help irs. Back tax help gov/pub527. Back tax help What's New Net Investment Income Tax (NIIT). Back tax help  Beginning in 2013, you may be subject to the Net Investment Income Tax (NIIT). Back tax help NIIT is a 3. Back tax help 8% tax on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) over the threshold amount. Back tax help Net investment income may include rental income and other income from passive activities. Back tax help Use Form 8960, Net Investment Income Tax, to figure this tax. Back tax help For more information on NIIT, go to IRS. Back tax help gov and enter “Net Investment Income Tax” in the search box. Back tax help Reminders Photographs of missing children. Back tax help  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Back tax help Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Back tax help You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Back tax help Introduction Do you own a second house that you rent out all the time? Do you own a vacation home that you rent out when you or your family isn't using it? These are two common types of residential rental activities discussed in this publication. Back tax help In most cases, all rental income must be reported on your tax return, but there are differences in the expenses you are allowed to deduct and in the way the rental activity is reported on your return. Back tax help First, this publication will look at the rental-for-profit activity in which there is no personal use of the property. Back tax help We will look at types of income and when each is reported, and at types of expenses and which are deductible. Back tax help Chapter 2 discusses depreciation as it applies to your rental real estate activity—what property can be depreciated and how to figure it. Back tax help Chapter 3 covers the actual reporting of your rental income and deductions, including casualties and thefts, limitations on losses, and claiming the correct amount of depreciation. Back tax help Special rental situations are grouped together in chapter 4. Back tax help These include condominiums, cooperatives, property changed to rental use, renting only part of your property, and a not-for-profit rental activity. Back tax help Finally, in chapter 5, we will look at the rules for rental income and expenses when there is also personal use of the dwelling unit, such as a vacation home. Back tax help Sale or exchange of rental property. Back tax help   For information on how to figure and report any gain or loss from the sale, exchange or other disposition of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Back tax help Sale of main home used as rental property. Back tax help   For information on how to figure and report any gain or loss from the sale or other disposition of your main home that you also used as rental property, see Publication 523, Selling Your Home. Back tax help Tax-free exchange of rental property occasionally used for personal purposes. Back tax help   If you meet certain qualifying use standards, you may qualify for a tax-free exchange (a like-kind or section 1031 exchange) of one piece of rental property you own for a similar piece of rental property, even if you have used the rental property for personal purposes. Back tax help   For information on the qualifying use standards, see Rev. Back tax help Proc. Back tax help 2008–16, 2008 IRB 547, at http://www. Back tax help irs. Back tax help gov/irb/2008-10_IRB/ar12. Back tax help html . Back tax help For more information on like-kind exchanges, see chapter 1 of Publication 544. Back tax help Comments and suggestions. Back tax help   We welcome your comments about this publication and your suggestions for future editions. Back tax help   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Back tax help NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Back tax help Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Back tax help   You can send your comments from www. Back tax help irs. Back tax help gov/formspubs/. Back tax help Click on “More Information” and then on “Comment on Tax Forms and Publications”. Back tax help   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Back tax help Ordering forms and publications. Back tax help   Visit www. Back tax help irs. Back tax help gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Back tax help Internal Revenue Service 1201 N. Back tax help Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Back tax help   If you have a tax question, check the information available on IRS. Back tax help gov or call 1-800-829-1040. Back tax help We cannot answer tax questions sent to either of the above addresses. Back tax help Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 523 Selling Your Home 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 551 Basis of Assets 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss   See chapter 6, How To Get Tax Help for information about getting these publications and forms. Back tax help Prev  Up  Next   Home   More Online Publications