Instructions For Schedule F - Profit Or Loss From Farming- 2007 (Page 3 of 7) in pdf

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distributions, per-unit retain allocations,

pledge part or all of your production to

Income from cancellation of debt.

and redemptions of nonqualified written

secure a CCC loan, you can elect to report

Generally, if a debt is canceled or forgiven,

notices of allocation and per-unit retain cer-

the loan proceeds as income in the year you

you must include the canceled amount in

tificates.

receive them, instead of the year you sell

income. If a federal agency, financial insti-

the crop. If you make this election (or made

tution, or credit union canceled or forgave a

Show patronage dividends received in

the election in a prior year), report loan

debt you owed of $600 or more, it should

cash and the dollar amount of qualified

proceeds you received in 2007 on line 7a.

send you a Form 1099-C, or similar state-

written notices of allocation. If you re-

Attach a statement to your return showing

ment, by January 31, 2008, showing the

ceived property as patronage dividends, re-

the details of the loan(s).

amount of debt canceled in 2007. However,

port the fair market value of the property as

certain solvent farmers can exclude can-

income. Include cash advances received

Forfeited CCC loans.

Include the full

celed qualified farm indebtedness from in-

from a marketing cooperative. If you re-

amount forfeited on line 7b, even if you

come. To find out if you must include any

ceived per-unit retains in cash, show the

reported the loan proceeds as income. This

cancellation of debt in income, see Pub.

amount of cash. If you received qualified

amount may be reported to you on Form

225.

per-unit retain certificates, show the stated

1099-A.

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State gasoline or fuel tax refunds you

dollar amount of the certificates.

If you did not elect to report the loan

received in 2007.

Do not include as income on line 5b

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proceeds as income, also include the for-

The amount of credit for federal tax

patronage dividends from buying personal

feited amount on line 7c.

paid on fuels, if you deducted the total cost

or family items, capital assets, or deprecia-

of the fuel on your 2006 Form 1040.

If you did elect to report the loan pro-

ble assets. Enter these amounts on line 5a

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The amount of credit for alcohol used

ceeds as income, you generally will not

only. Because you do not report patronage

as fuel that was claimed on Form 6478.

have an entry on line 7c. But if the amount

dividends from these items as income, you

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forfeited is different from your basis in the

The interest part of the credit or re-

must subtract the amount of the dividend

commodity, you may have an entry on

fund of the federal telephone excise tax

from the cost or other basis of these items.

line 7c.

paid for your farming business telephone

lines from Form 8913, line 15, column (e).

See Pub. 225 for details on the tax con-

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The amount of credit or refund of the

Lines 6a and 6b

sequences of electing to report CCC loan

federal telephone excise tax paid for your

proceeds as income or forfeiting CCC

Enter on line 6a the total of the following

farming business telephone lines if you de-

loans.

amounts.

ducted any telephone excise tax. Include

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the smaller of the amount deducted or the

Direct payments.

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amount from Form 8913, line 15, column

Counter-cyclical payments.

Lines 8a Through 8d

(d), except to the extent the deduction did

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Price support payments.

not reduce federal income tax.

In general, you must report crop insurance

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Market gain from the repayment of a

proceeds in the year you receive them. Fed-

The amount of credit for biodiesel and

secured Commodity Credit Corporation

eral crop disaster payments are treated as

renewable diesel fuels that was claimed on

(CCC) loan for less than the original loan

crop insurance proceeds. However, if 2007

Form 8864.

amount.

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was the year of damage, you can elect to

Any recapture of excess depreciation

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Diversion payments.

include certain proceeds in income for

on any listed property, including any sec-

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2008. To make this election, check the box

Cost-share payments (sight drafts).

tion 179 expense deduction, if the business

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on line 8c and attach a statement to your

use percentage of that property decreased

Payments in the form of materials

return. See Pub. 225 for a description of the

to 50% or less in 2007. Use Form 4797 to

(such as fertilizer or lime) or services (such

proceeds for which an election can be made

figure the recapture. See the instructions

as grading or building dams).

and for what you must include in your

for Schedule C, line 13, on page C-4 for the

statement.

These amounts are government payments

definition of listed property.

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you received and are usually reported to

The inclusion amount on leased listed

Generally, if you elect to defer any eligi-

you on Form 1099-G. You may also re-

ble crop insurance proceeds, you must de-

property (other than vehicles) when the

ceive Form CCC-1099-G from the Depart-

fer all such crop insurance proceeds

business use percentage drops to 50% or

ment of Agriculture showing the amounts

less. See Pub. 946 to figure the amount.

(including federal crop disaster payments).

and types of payments made to you.

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Any recapture of the deduction for

Enter on line 8a the total crop insurance

On line 6b, report only the taxable

clean-fuel vehicles and clean-fuel vehicle

proceeds you received in 2007, even if you

amount. For example, do not report the

refueling property used in your farming

elect to include them in income for 2008.

market gain shown on Form CCC-1099-G

business. For details on how to figure re-

on line 6b if you elected to report CCC loan

Enter on line 8b the taxable amount of

capture, see Regulations section 1.179A-1.

proceeds as income in the year received

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the proceeds you received in 2007. Do not

The gain or loss on the sale of com-

(see Lines 7a Through 7c below). No gain

include proceeds you elect to include in

modity futures contracts if the contracts

results from redemption of the commodity

income for 2008.

were made to protect you from price

because you previously reported the CCC

changes. These are a form of business in-

Enter on line 8d the amount, if any, of

loan proceeds as income. You are treated as

surance and are considered hedges. If you

crop insurance proceeds you received in

repurchasing the commodity for the

had a loss in a closed futures contract, en-

2006 and elected to include in income for

amount of the loan repayment. However, if

close the amount of the loss in parentheses.

2007.

you did not report the CCC loan proceeds

under the election, you must report the mar-

For property acquired and

ket gain on line 6b.

hedging positions established,

Line 10

you must clearly identify on

your books and records both the

Use this line to report income not shown on

Lines 7a Through 7c

hedging transaction and the item(s) or ag-

lines 1 through 9, such as the following.

gregate risk that is being hedged.

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Illegal federal irrigation subsidies. See

Commodity Credit Corporation (CCC)

Pub. 225.

loans.

Generally, you do not report CCC

Purchase or sales contracts are not true

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loan proceeds as income. However, if you

Bartering income.

hedges if they offset losses that already oc-

F-3

Instructions For Schedule F - Profit Or Loss From Farming- 2007 Page 3

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