IRS Data Shows Large Farm Losses
The IRS each year provides a lot of data related to income and deductions reported by all taxpayers for each tax year. The latest data released by the IRS is for 2017.
There were 1,799,262 Schedule F tax returns reported that year. These returns showed a cumulative loss of $19,166,242,000 (that is a billion not a million).
There were 462,948 Form 4835’s (crop share rental) reporting net income of $3,850,104,000 for this same year.
Now let’s see how that compares to five years ago.
During 2013, Schedule F farmers filed 1,812,920 returns and reported a net loss of $7.798 billion.
Crop share farmers filed 514,913 returns and reported net income of $5.569 billion.
In net, farmers (including crop share farmers) saw their net loss of about $2.2 billion in 2013 increase to a net loss of about $15.2 billion in 2017.
This data does not reflect any income that is reported on any corporation or partnership. However, we would surmise that the trend for those entities would be the same.
2012 data shows that farmers in net reported about $200 million of net taxable income on Schedule F and Form 4835. This is about the only year in the last 10 years where farmers have ever reported net income.
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.
This is sad. However, unless I’m misunderstanding the article, these are 2017 figures. The like-kind exchange rules that changed as a result of the Tax Cuts and Jobs Act weren’t effective until 2018. That’s the year that I saw many changes on the Schedule F bottom line.
For 2017, I would guess reasons for the higher losses are due to weather-related situations, lower commodity prices, and ever-increasing costs of production. That’s my view as a tax preparer and farmer’s wife of 43 years! There’s always next year…..right?