CFAP Belongs to the Farm, Not the Owners
Farm entities who receive CFAP payments in 2020 or 2021 may have increased limits due to certain owners providing at least 400 hours of labor to the entity.
I have heard from a few readers and CPAs that these owners seem to think they are then entitled to receive those extra payments. The correct answer is that these payments were earned by the entity and should remain as part of the entity and not directly distributed to those owners.
The entity earned all of the payments. If there are extra owners that allow a greater payment that is a benefit to the entity and not a benefit to the owner(s).
If the owners want to make a distribution of some or all of these payments it should be done on a pro-rata basis, but make sure you understand any possible income tax consequences.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
It seems like recently I read something about another (third) CFAP payment that will be made soon to wheat producers based upon the crop acres in the 2020 wheat crop – something like $20 per crop acre. I checked with the local FSA office in Walla Walla and was told not to expect any additional payment. Could you confirm that?