How to report farming income or Schedule F

Individuals, trusts, partnerships, S corporations, LLCs taxed as partnerships, and sole members of a domestic LLC engaged in farming must report farm income and expenses on Schedule F (Form 1040). This form is used to calculate the net profit or loss from regular farming operations. Corporations, however, use Form 1120 for reporting farm income or loss.

Who Must File Schedule F?

• Individuals, trusts, partnerships, S corporations, and LLCs taxed as partnerships engaged in farming.
• Those who cultivate, operate, or manage a farm for gain or profit (as owner or tenant).
• Includes income from stock, dairy, poultry, fish, fruit, truck farms, plantations, ranches, ranges, orchards, groves, and nurseries (ornamental plants).

What Income Is Reported on Schedule F?

• Sales of farm products: Includes livestock, produce, grains, or other products raised or bought for resale. Report the fair market value of any property or services received.
• Rents (including crop shares): If you materially participate in farm management or operation, report rent income on line 2.
• Agricultural program payments: Government payments such as price loss coverage, agriculture risk coverage, Market Facilitation Program payments, and cost-share payments. Report total payments on line 4a and taxable amount on line 4b.
• Custom hire (machine work): Income from contract work performed off your farm for others. Report on Schedule F unless the work is more than incidental to farming (then use Schedule C).
• Cancellation of debt: If debt incurred in farming is canceled, report the amount on Schedule F. Nonbusiness debt is reported on Schedule 1 (Form 1040), line 8.
• CCC loans: Generally not reported as income unless you elect to report proceeds in the year received. Report on line 5a if elected.
• Crop insurance proceeds: Report on line 6a. You may elect to defer reporting certain proceeds to the following year if damage occurred in 2025.

Accounting Methods

• Cash method: Report income when received and deduct expenses when paid. Complete Parts I and II of Schedule F.
• Accrual method: Report income when earned and deduct expenses when incurred. Complete Parts II and III of Schedule F and Part I, line 9.

Important Exclusions

Do NOT report gains or losses from sales of:

• Land
• Depreciable farm equipment
• Buildings and structures
• Livestock held for draft, breeding, sport, or dairy purposes

These are reported on Form 4797, Sales of Business Property. See Publication 225 for details.

Reporting Forms and References

• Form 1099-PATR: Report on line 3a.
• Form 1099-A: Report on line 5b.
• Form 1099-MISC (crop insurance): Report on line 6a.
• Form 1099-G or CCC-1099-G:
  • Disaster payments → line 6a
  • Other agricultural program payments → line 4a

Source:

Disclaimer: Always verify with the current Federal or State Department of Revenue Forms and Instructions. Tax laws and forms may change annually. For complex situations, consult a CPA or tax attorney.