J.K. Lasser's Small Business Taxes 2022

CHAPTER 20Deductions and Tax Credits for Farmers

1. Farm Expenses
2. Interest on Loans
3. Qualified Business Income Deduction
4. Farm Losses
5. Farm-Related Tax Credits
6. Nondeductible Farm-Related Expenses

The U.S. Department of Agriculture 2017 Census (the next census is in 2022) reports that there were more than 2.04 million farms in the U.S. Business owners engaged in farming activities may be entitled to special deductions not claimed by other businesses. These special deductions are in addition to the same types of deductions that other business owners enjoy. A farm includes stock, dairy, poultry, fish, fruit, and truck farms. Thus, it encompasses plantations, ranches, ranges, and orchards.

Farmers have been given these special rules in recognition of their unique business arrangements and to make their tax reporting easier. Some of these rules have been highlighted in other parts of this book. For example, there are some special income rules for farmers (Chapter 4) and farmers (other than farming syndicates) are generally allowed to use the cash method of accounting to report their income and expenses regardless of the amount of their gross receipts. They also have a special 2-year carryback for net operating losses (in Chapter 4). And if they are not “small businesses,” they may still elect out of the interest expense limitation (Chapter 13).

For further information about deducting farming expenses, see IRS Publication 225, Farmer's Tax Guide.

Farm Expenses

Ordinary and necessary ...