Discussion:Farm taxation

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Discussion Forum Index --> Tax Questions --> Farm taxation

Michael balsamo (talk|edits) said:

28 March 2007
Is it common for S-Corporations to file Schedule F? My software allows it but IRS forms pub 225 & instructions do not indicate this treatment.

Tfortaxes@msn.com (talk|edits) said:

28 March 2007
S-corps are S-corps. You just fill in the income and expenses like any other S-corp. The activity of the S is stated at the top of the Form page 1. You do not need a Schedule F.

Pierce (talk|edits) said:

28 March 2007
I have also wondered about this. Have always filed S-corp farms/ranches on the front page - but why is there a Schedule F included in the 1120S if we are not supposed to use it?

Kevinh5 (talk|edits) said:

28 March 2007
How do you prove it is gross income from farming (for all of those great benefits at the 1040 level that go to farmers) if you don't use the correct form? Or has that never bothered anyone?

Kevinh5 (talk|edits) said:

28 March 2007
(Darn tax rules. They sure get in the way of getting any returns done.)

Pierce (talk|edits) said:

28 March 2007
I use the Business Activity code number to indicate what type of business it is, as well as "other income and other expenses" for the odd things.

I will renew this discussion post tax season. Cannot quickly find what year the 1120S Sched F showed up, but offhand it seems that it is within the last ten years or so, as I was groaning at the thought of spending hours reentering depreciation schedules with no benefit to anyone.

Don't like the way the Sched F flows into the 1120S, and also don't care for the fact that at the top - where it says "attach to form such and such" the 1120S is not mentioned.

Very much appreciate your comments on this - and will do more research later. If anyone besides myself is handling S ranch/farms in this manner would love to know.

Victor1530 (talk|edits) said:

9 April 2007
Are the Counter Cyc Pmts subject to SE? I know Farm rental is not. These AG pmts according PUB 225 should be on "F" part one. No other farm income. Looked thru a couple of threads before asking the question, if I missed something in the PUB please let me know.

Wwtaxes (talk|edits) said:

9 April 2007
So you have farms that are S Corps?

Doesn't that violate several almanacers rule of never letting a corp own real estate? The reason I ask is that I have a farm that is a partnership, and thinking about possibly changing entities, but everything I've read says that it's a bad idea to have a corp own RE, and given the reasons cited, I can see why.

Sw (talk|edits) said:

April 9, 2007
Victor, they can also go on Form 4835 line 3.

JAD (talk|edits) said:

9 April 2007
Wwtaxes, don't have real estate in the corp. I inherited one and it's messy for all the reasons that I'm sure you've already read. Have another farm c corp that is fine. Real estate is owned by individuals or partnerships and the corp leases the land from those taxpayers. I think the farmers need to have different entities to maximize rights to cheap water. Be clear on your reasons for changing from partnership to another entity. There is almost always a way to accomplish your goals without sticking the real estate in the corp.

Wwtaxes (talk|edits) said:

9 April 2007
Thanks JAD. I have an ever-growing list of post-tax season questions to look into, and this was one of them. But when I saw the S Corp farm on a current discussion, I couldn't resist asking.

I hope everyone will be up for after season discussions, and that they don't disappear on vacation for too long!

Pierce (talk|edits) said:

17 January 2008
Would love to hear more thoughts on this.

Another thing - if you use Schedule F on an 1120S return - do you put the farmer/officer compensation on the Sch F or on the 1120S face?


Outwesttax (talk|edits) said:

18 January 2008
Sigh, shows how far this once agricultural society has become urbanized. So many in the urban world just don't know all the artifacts of the old farm lobby lurking in the code. Soooo... why the Sch F?

The schedule F allows the service to match: Farm program payments and the special elections on how to handle. Cooperative distributions The special farm depreciation rules. Farm business mileage has some special rules. Drought sales of livestock. And on and on...

Simply put, the schedule F puts the service on notice that the return has all these special issues. And all those issues apply the same to a S Corp as a individual.

And I put the office compensation on page 1 of the 1120S.

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