Instructions For Schedule F - Profit Or Loss From Farming Form 2006 (Page 3 of 7) in pdf

income. Include cash advances received

Include the full

celed qualified farm indebtedness from in-

Forfeited CCC loans.

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.

State gasoline or fuel tax refund you

dollar amount of the certificates.

received in 2006.

If you did not elect to report the loan

•

proceeds as income, also include the for-

The amount of credit for federal tax

Do not include as income on line 5b

feited amount on line 7c.

paid on fuels claimed on your 2005 Form

patronage dividends from buying personal

1040.

or family items, capital assets, or deprecia-

If you did elect to report the loan pro-

•

ble assets. Enter these amounts on line 5a

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

forfeited is different from your basis in the

The amount of biodiesel and renewa-

must subtract the amount of the dividend

commodity, you may have an entry on

ble diesel fuels credit that was claimed on

from the cost or other basis of these items.

line 7c.

Form 8864.

•

Any recapture of excess depreciation

See Pub. 225 for details on the tax con-

on a listed property, including any section

sequences of electing to report CCC loan

Lines 6a and 6b

179 expense deduction, if the business use

proceeds as income or forfeiting CCC

percentage of that property decreased to

loans.

Enter on line 6a the total of the following

50% or less in 2006. Use Form 4797 to

amounts.

figure the recapture. See the instructions

•

Direct payments.

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

Lines 8a Through 8d

•

definition of listed property.

Counter-cyclical payments.

•

The inclusion amount on leased listed

In general, you must report crop insurance

Price support payments.

•

proceeds in the year you receive them. Fed-

property (other than vehicles) when the

Market gain from the repayment of a

business use percentage drops to 50% or

eral crop disaster payments are treated as

secured Commodity Credit Corporation

less. See Pub. 946 to figure the amount.

crop insurance proceeds. However, if 2006

(CCC) loan for less than the original loan

•

was the year of damage, you can elect to

Any recapture of the deduction for

amount.

include certain proceeds in income for

•

clean-fuel vehicles used in your farming

Diversion payments.

2007. To make this election, check the box

business and clean-fuel vehicle refueling

•

Cost-share payments (sight drafts).

on line 8c and attach a statement to your

property. For details on how to figure re-

•

return. See Pub. 225 for a description of the

Payments in the form of materials

capture, see Pub. 535.

•

proceeds for which an election can be made

(such as fertilizer or lime) or services (such

The gain or loss on the sale of com-

and for what you must include in your

as grading or building dams).

modity futures contracts if the contracts

statement.

were made to protect you from price

These amounts are government payments

changes. These are a form of business in-

Generally, if you elect to defer any eligi-

you received, usually reported to you on

surance and are considered hedges. If you

ble crop insurance proceeds, you must de-

Form 1099-G. You may also receive Form

fer all such crop insurance proceeds

had a loss in a closed futures contract, en-

CCC-1099-G from the Department of Ag-

(including federal crop disaster payments).

close it in parentheses.

riculture showing the amounts and types of

payments made to you.

Enter on line 8a the total crop insurance

For property acquired and

proceeds you received in 2006, even if you

On line 6b, report only the taxable

hedging positions established,

elect to include them in income for 2007.

amount. For example, do not report the

you must clearly identify on

Enter on line 8b the taxable amount of

market gain shown on Form CCC-1099-G

your books and records both the

the proceeds you received in 2006. Do not

on line 6b if you elected to report CCC loan

hedging transaction and the item(s) or ag-

include proceeds you elect to include in

proceeds as income in the year received

gregate risk that is being hedged.

income for 2007.

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

results from redemption of the commodity

Purchase or sales contracts are not true

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

because you previously reported the CCC

hedges if they offset losses that already oc-

crop insurance proceeds you received in

loan proceeds as income. You are treated as

curred. If you bought or sold commodity

2005 and elected to include in income for

repurchasing the commodity for the

futures with the hope of making a profit due

2006.

amount of the loan repayment. However, if

to favorable price changes, report the profit

you did not report the CCC loan proceeds

or loss on Form 6781 instead of this line.

under the election, you must report the mar-

Line 10

ket gain on line 6b.

Use this line to report income not shown on

Part II. Farm

lines 1 through 9, such as the following.

•

Lines 7a Through 7c

Illegal federal irrigation subsidies. See

Expenses

Pub. 225.

Commodity Credit Corporation (CCC)

•

Do not deduct the following.

Bartering income.

loans.

Generally, you do not report CCC

•

loan proceeds as income. However, if you

Income from cancellation of debt.

Personal or living expenses (such as

pledge part or all of your production to

Generally, if a debt is canceled or forgiven,

taxes, insurance, or repairs on your home)

secure a CCC loan, you can elect to report

you must include the canceled amount in

that do not produce farm income.

•

the loan proceeds as income in the year you

income. If a federal agency, financial insti-

Expenses of raising anything you or

receive them, instead of the year you sell

tution, or credit union canceled or forgave a

your family used.

the crop. If you make this election (or made

debt you owed of $600 or more, it should

•

The value of animals you raised that

the election in a prior year), report loan

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

died.

proceeds you received in 2006 on line 7a.

ment, by January 31, 2007, showing the

•

Inventory losses.

Attach a statement to your return showing

amount of debt canceled in 2006. However,

•

the details of the loan(s).

certain solvent farmers can exclude can-

Personal losses.

F-3

Instructions For Schedule F - Profit Or Loss From Farming Form 2006 Page 3

Related Articles

Related forms

Related Categories