Schedule F Reporting Update
I got some feedback on my previous post on Tax Reform and low Schedule F reporting of income. Several sources of farm income does not show up on a Schedule F. This includes many common sales of farm assets such as breeding stock and equipment. Most of the expenses associated with this income is deducted on Schedule F, however when these assets are sold, none of the gains appears on Schedule F. Rather, this income is usually reported on Form 4797.
Therefore a simplistic review of total Schedule F income (however in 2011 and 2012 – net losses) is not complete without bringing in these other sources of income. These years also included 100% bonus depreciation (2011) and 50% in 2012 and Section 179 expense of $500,000. Since farming is very capital-intensive, these “extra deductions” would result in lower farm income.
However, we must realize that the staff writing these tax reform proposals do not have our background and it is our job to inform them of the unique issues facing agriculture.
Paul Neiffer, CPA
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.
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