Instructions For Schedule F - Profit Or Loss From Farming Form 2006
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7Department of the Treasury
Internal Revenue Service
2006 Instructions for Schedule F
Use Schedule F (Form 1040) to report farm income and expenses. File it with Form 1040,
Profit or Loss
1040NR, 1041, 1065, or 1065-B.
Your farming activity may subject you to state and local taxes and other requirements
From Farming
such as business licenses and fees. Check with your state and local governments for more
information.
Additional information.
Pub. 225 has samples of filled-in forms and schedules, and lists
important dates that apply to farmers.
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tions, and then on What’s Hot in forms and
Section references are to the Internal
Form 8910 to claim a credit for plac-
publications, or see Pub. 553.
ing a new alternative motor vehicle in serv-
Revenue Code unless otherwise noted.
ice after 2005 for business use.
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Form 8911 to claim a credit for plac-
ing qualified alternative fuel vehicle refuel-
General Instructions
What’s New
ing property in service after 2005 for
business use.
Deduction for qualified clean-up costs.
Other Schedules and Forms
Heavy highway vehicle use tax.
If you use
You may be able to deduct 50% of amounts
You May Have To File
certain highway trucks, truck-trailers, trac-
paid or incurred for removal of debris or
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tor trailers, or buses in your farming busi-
demolition of structures located in the Gulf
Schedule E, Part I, to report rental in-
ness, you may have to pay a federal
Opportunity (GO) Zone. See GO Zone
come from pastureland that is based on a
highway motor vehicle use tax. See the In-
clean-up costs on page F-6.
flat charge. Report on Schedule F, line 10,
structions for Form 2290 to find out if you
pasture income received from taking care
Increased expense limit for qualified
owe this tax.
of someone else’s livestock.
For qualified timber
timber property.
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You may have to file
property you own in the GO Zone, the Rita
Schedule J to figure your tax by aver-
Information returns.
information returns for wages paid to em-
GO Zone, or the Wilma GO Zone, the limit
aging your farm income over the previous 3
ployees, certain payments of fees and other
on expensing reforestation expenditures is
years. Doing so may reduce your tax.
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increased by up to $10,000. See Forestation
nonemployee compensation, interest, rents,
Schedule SE to pay self-employment
and reforestation costs on page F-6.
royalties, real estate transactions, annuities,
tax on income from your farming business.
and pensions. You may also have to file an
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Increased section 179 limits for GO Zone
Form 4562 to claim depreciation on
information return if you sold $5,000 or
property.
You may be able to take an in-
assets placed in service in 2006, to claim
more of consumer products to a person on a
creased section 179 deduction for qualified
amortization that began in 2006, to make an
buy-sell, deposit-commission, or other sim-
GO Zone property you placed in service in
election under section 179 to expense cer-
ilar basis for resale. For details, see the
2006. For information, see Pub. 225.
tain property, or to report information on
2006 General Instructions for Forms 1099,
vehicles and other listed property.
1098, 5498, and W-2G.
Additional depreciation allowed for
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Form 4684 to report a casualty or theft
qualified property.
If, during 2006, you
If you received cash of more than
gain or loss involving farm business prop-
placed in service qualified property in the
$10,000 in one or more related transactions
erty, including livestock held for draft,
GO Zone, you may be able to claim addi-
in your farming business, you may have to
breeding, sport, or dairy purposes. See Pub.
tional depreciation deductions. See Pub.
file Form 8300. For details, see Pub. 1544.
225 for more information.
225 for more information on how to report
various farm losses, such as losses due to
Reportable transaction disclosure
Employee retention credit has expired.
death of livestock or damage to crops or
If you entered into a reportable
statement.
This credit was available for qualified
other farm property.
transaction in 2006, you must file Form
wages paid before January 1, 2006.
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8886 to disclose information if your federal
Form 4797 to report sales, exchanges,
income tax liability is affected by your par-
Clean-fuel vehicle and refueling property
or involuntary conversions (other than
ticipation in the transaction. You may have
These deduc-
deductions have expired.
from a casualty or theft) of certain farm
to pay a penalty if you are required to file
tions were available for property placed in
property. Also use this form to report sales
Form 8886 but do not do so. You may also
service before January 1, 2006.
of livestock held for draft, breeding, sport,
have to pay interest and penalties on any
or dairy purposes.
Indian employment credit has expired.
reportable transaction understatements. For
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This credit was available for qualified
Form 4835 to report rental income
more information on reportable transac-
wages paid before January 1, 2006.
based on farm production or crop shares if
tions, see Reportable Transaction Disclo-
you did not materially participate in the
sure Statement that begins on page C-2 of
At the time these instructions
management or operation of the farm. This
the instructions for Schedule C.
went to print, Congress was
income is not subject to self-employment
considering legislation that
tax. See Pub. 225.
Estimated Tax
would extend the Indian em-
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Form 8824 to report like-kind ex-
ployment credit that expired at the end of
If you had to make estimated tax payments
changes.
2005. To find out if this legislation was
in 2006 and you underpaid your estimated
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enacted, and for more details, go to www.
Form 8903 to take a deduction for in-
tax, you will not be charged a penalty if
come from domestic production activities.
irs.gov, click on More Forms and Publica-
both of the following apply.
F-1
Cat. No. 17152R
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