Instructions For Schedule F - Profit Or Loss From Farming

If you paid more mortgage interest than

plan is a plan that covers only you (or you

residence, even if you use it for your farm-

is shown on Form 1098, see chapter 4 of

and your spouse).

ing business. But you can deduct expenses

Pub. 535 to find out if you can deduct the

you paid for your farming business that are

Form 5500.

File this form for a plan that

additional interest. If you can, include the

more than the cost of the base rate for the

does not meet the requirements for filing

amount on line 23a. Attach a statement to

first phone line. For example, if you had a

Form 5500-EZ.

your return explaining the difference and

second phone line, you can deduct the busi-

enter “See attached” in the margin next to

ness percentage of the charges for that line,

For details, see Pub. 560.

line 23a.

including the base rate charges.

If you and at least one other person

(other than your spouse if you file a joint

Lines 26a and 26b

Lines 34a Through 34f

return) were liable for and paid interest on

the mortgage and the other person received

If you rented or leased vehicles, machinery,

Include all ordinary and necessary farm ex-

the Form 1098, include your share of the

or equipment, enter on line 26a the business

penses not deducted elsewhere on Schedule

interest on line 23b. Attach a statement to

portion of your rental cost. But if you

F, such as advertising, office supplies, etc.

your return showing the name and address

leased a vehicle for a term of 30 days or

Do not include fines or penalties paid to a

of the person who received the Form 1098.

more, you may have to reduce your deduc-

government for violating any law.

In the margin next to line 23b, enter “See

tion by an inclusion amount. See Leasing a

attached.”

Car in Pub. 463 to figure this amount.

Any loss from this

At-risk loss deduction.

Do not deduct interest you prepaid in

activity that was not allowed as a deduction

Enter on line 26b amounts paid to rent

2008 for later years; include only the part

last year because of the at-risk rules is

or lease other property such as pasture or

that applies to 2008.

treated as a deduction allocable to this ac-

farmland.

tivity in 2008. However, for the loss to be

deductible, the amount “at risk” must be

increased.

Line 24

Line 27

See chapter 10 of Pub. 535.

Bad debts.

Enter the amounts you paid for farm labor.

Enter amounts you paid for incidental re-

Do not include amounts paid to yourself.

pairs and maintenance of farm buildings,

If your business

Business start-up costs.

Reduce your deduction by the amounts

machinery, and equipment that do not add

began in 2008, you can elect to deduct up to

claimed on:

to the property’s value or appreciably pro-

$5,000 of certain business start-up costs.

•

Form 5884, Work Opportunity Credit,

long its life.

This limit is reduced (but not below zero)

line 2;

by the amount by which your start-up costs

Do not deduct repairs or maintenance on

•

Form 5884-A, Credits for Affected

exceed $50,000. You can amortize any re-

your home.

Midwestern Disaster Area Employers,

maining qualified business start-up costs

lines 2 and 6;

over 180 months. For details, see chapters 4

•

and 7 of Pub. 225. For amortization that

Form 8844, Empowerment Zone and

Line 31

begins in 2008, you must complete and at-

Renewal Community Employment Credit,

tach Form 4562.

line 2;

You can deduct the following taxes on this

•

Form 8845, Indian Employment

line.

Business use of your home.

You may be

•

Credit, line 4; and

Real estate and personal property

able to deduct certain expenses for business

•

Form 8861, Welfare-to-Work Credit,

taxes on farm business assets.

use of your home, subject to limitations.

•

line 2.

Social security and Medicare taxes

Use the worksheet in Pub. 587 to figure

you paid to match what you are required to

your allowable deduction. Do not use Form

Include the cost of boarding farm labor

withhold from farm employees’ wages.

8829.

but not the value of any products they used

•

from the farm. Include only what you paid

Federal unemployment tax.

Forestation and reforestation costs.

Refor-

•

household help to care for farm laborers.

Federal highway use tax.

estation costs are generally capital expendi-

•

Contributions to state unemployment

If you provided taxable fringe

tures. However, for each qualified timber

insurance fund or disability benefit fund if

benefits to your employees,

property, you can elect to expense up to

they are considered taxes under state law.

such as personal use of a car, do

$10,000 ($5,000 if married filing sepa-

not include in farm labor the

rately) of qualifying reforestation costs

Do not deduct the following taxes on

amounts you depreciated or deducted else-

paid or incurred in 2008.

this line.

where.

•

Federal income taxes, including your

You can elect to amortize the remaining

self-employment tax. However, you can

costs over 84 months.

deduct one-half of your self-employment

Line 25

The amortization election does not ap-

tax on Form 1040, line 27.

ply to trusts and the expense election does

•

Estate and gift taxes.

Enter your deduction for contributions to

not apply to estates and trusts. For details

•

employee pension, profit-sharing, or annu-

Taxes assessed for improvements,

on reforestation expenses, see chapters 4

ity plans. If the plan included you as a

such as paving and sewers.

and 7 of Pub. 225. For amortization that

•

self-employed person, enter contributions

begins in 2008, you must complete and at-

Taxes on your home or personal use

made as an employer on your behalf on

tach Form 4562.

property.

Form 1040, line 28 (or on Form 1040NR,

•

State and local sales taxes on property

line 27), not on Schedule F.

Legal and professional fees.

You can in-

purchased for use in your farming business.

clude on this line fees charged by account-

Generally, you must file the applicable

Instead, treat these taxes as part of the cost

ants and attorneys that are ordinary and

form listed below if you maintain a pen-

of the property.

necessary expenses directly related to your

sion, profit-sharing, or other funded-de-

•

Other taxes not related to your farm-

farming business. Include fees for tax ad-

ferred compensation plan. The filing

ing business.

vice and for the preparation of tax forms

requirement is not affected by whether or

related to your farming business. Also in-

not the plan qualified under the Internal

clude expenses incurred in resolving as-

Revenue Code, or whether or not you claim

serted tax deficiencies related to your

Line 32

a deduction for the current tax year. There

farming business.

is a penalty for failure to timely file these

Enter amounts you paid for gas, electricity,

forms.

water, and other utilities for business use on

You can deduct the amount you

Tools.

File this form if you have a

the farm. Do not include personal utilities.

paid for tools that have a short life or cost a

Form 5500-EZ.

one-participant retirement plan that meets

You cannot deduct the base rate (including

small amount, such as shovels and rakes.

certain requirements. A one-participant

taxes) of the first telephone line into your

F-6

Instructions For Schedule F - Profit Or Loss From Farming - 2008 Page 6

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