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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
This fact sheet helps to determine tax filing dates, penalties, and returns. This
is useful in cash flow planning.
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
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.
This fact sheet focuses on correct income tax reporting when business property is
traded. It uses many examples, with filled-in forms.
This fact sheet gives a general overview of dealing with a net operating loss (NOL).
It gives loss situations and general strategies.
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
The concept of the NOL rules is quite simple. This fact sheet discusses the carrying
rules, planning tips, and other NOL information.
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.
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
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
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.
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.
It is important to claim all legitimate business expenses on income taxes. This fact
sheet gives an overview of which business expenses are deductible.
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.
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.
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.
For more topics, visit related links.
The articles on ruraltax.org have been peer-reviewed.