|Series||Report / 103d Congress, 2d session, Senate -- 103-244|
|The Physical Object|
|Pagination||8 p. ;|
To elect to include crop insurance and disaster payments in gross income in the year following the year of the crop loss, farmers must use the cash method of accounting and must establish that it is their normal business practice to report more than 50% of income from the sale of the crop in a later year (Rev. Rul. ). SPECIAL TAX RULE FOR CROP INSURANCE PROCEEDS AND DISASTER PAYMENTS APRIL 5, —Ordered to be printed Filed under authority of the order of the Senate of March 22 (legislative day, February 22), Mr. MOYNIHAN, from the Committee on Finance, submitted the following REPORT [To accompany S. ]. The first option involves reporting the crop insurance proceeds as income in the year payment is received. The second option applies a tax rule that allows a qualified taxpayer to elect to include crop insurance and disaster payments in the year following the year of the crop loss if, under the taxpayer’s business practice, income from the. In most cases, you must report crop insurance proceeds in the year you receive them. Federal crop disaster payments are treated as crop insurance proceeds. However, if was the year of damage, you can elect to include certain proceeds in income for To make this election, check the box on line 6c and attach a statement to your return.
Special Estimated Tax Rules for Qualified Farmers 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. You can request income tax withholding from crop. L. 94–, §§ (b)(13)(A), (a), (b), inserted reference to disaster payments in heading, provided that payments received under the Agricultural Act of , as amended, be treated as insurance proceeds received as a result of destruction or damage to crops if the payments are received as the result of destruction or damage from. The election to postpone reporting some or all crop insurance proceeds and crop disaster payments until the following year is available if you meet these three conditions: 1. . Crop insurance and disaster payments are normally reported as income in the year of receipt. However, operators and share-rent landlords on the cash method of accounting may elect to defer crop insurance proceeds and federal disaster payments to the year after the year of the destruction or damage to the crops. I.R.C. §(d).
With the uncertainty of the individual income tax rates for calendar year , it may make sense to include the crop insurance proceeds in , pay the income tax and evaluate the benefit of an election to defer the crop insurance proceeds on an amended tax return in calendar year Farmers typically file their Form tax return on. The statute governing deferrals of crop insurance and disaster assistance proceeds is silent on the issue of whether the income tax on deferrals must be paid by the electing taxpayer. The regulations state that an election is “ deemed to cover all such proceeds which are attributable to crops representing a single trade or business under. The Tax Code has allowed farmers for many years to elect to defer for one year the receipt of crop insurance proceeds due to destruction or damage to the crop (primarily due to weather events such as hail, drought, etc.). These policies were originally designed to provide payments due to a certain specific cause such as a hail storm. Generally, cash basis farmers must include proceeds from crop insurance and federal disaster programs in gross income for the tax year during which they receive the payments. IRC § (f), however, provides a special deferral provision for insurance proceeds received as a result of “destruction or damage to crops.”.