Instructions For 2005 Form Fia-40 - Farm Income Averaging printable pdf download

O R E G O N

INSTRUCTIONS FOR 2005 FORM FIA-40

D E PA R T M E N T

Farm Income Averaging

O F R E V E N U E

• Raising, shearing, feeding, caring for, training, and man-

You may elect to figure your 2005 tax by averaging, over the

ag ing animals.

previous three years (base years), all or part of your 2005

• Leasing land to a tenant engaged in a farming busi ness,

tax able farm income.

but only if the lease payments are based on a share of the

You will need copies of your original or amended Oregon

tenant’s pro duc tion (not a fixed amount).

income tax returns for tax years 2002, 2003, and 2004. You

• Wages and other compensation you received as a share-

can obtain copies of prior years’ returns for a fee from the

hold er in an S corporation engaged in a farming busi ness.

Oregon De part ment of Revenue. See Tax pay er As sis tance

on page 6 for numbers to call.

A farming business does not include:

If you filed an Oregon part-year or nonresident return in any

• Contract harvesting of an agricultural or hor ti cul tur al

of the three base years, you will need Schedule Z, Com pu -

com mod i ty grown or raised by someone else, or

ta tion of Tax, to complete Form FIA-40. If any of the three

• Merely buying or reselling plants or animals grown or

base years are part-year or non res i dent re turns, ignore the

raised by someone else.

computation of tax for the applicable year on Form FIA-40

and complete Schedule Z. Fill in the com put ed tax from

Line instructions

Sched ule Z on lines 8, 12, or 16, whichever ap plies.

Line 5, 2002 taxable income. If you used FIA-40 to figure your

tax for 2004, enter on line 5 the amount from your 2004 FIA-

Elected farm income

40, line 11. If you used Schedule Z to figure your tax for 2004

Your elected farm income is the amount of your taxable

on FIA-40, FIA-40N, or FIA-40P, enter on line 5 the amount

income from farming that you elect to include on Form FIA-

from your 2004 Schedule Z, Computation for Tax Year 2002.

40, line 2. This is the amount on federal Schedule J, line 2, if

If you used Computation A, use the amount on line 9. If you

you elect to use farm income averaging for fed er al. Do not

used Computation B, use the amount on line 6. If you used

enter more than the amount on line 1.

Computation C, use the amount on line 3.

To figure elected farm income, first fig ure your taxable

If you used FIA-40 to figure your tax for 2003 but not 2004,

income from farming. Taxable income from farm ing in cludes

enter on line 5 the amount from your 2003 FIA-40, line 15. If

all income, gains, losses, and deductions at trib ut able to any

you used Sched ule Z to figure your tax for 2003 on FIA-40,

farming business. Gains and losses from the sale or other dis-

FIA-40N, or FIA-40P, enter on line 5 the amount from your

po si tion of property (other than land) must be from prop er ty

2003 Schedule Z, Computation for Tax Year 2002. If you used

regularly used for a sub stan tial pe ri od of time in your farm-

Com pu ta tion A, use the amount on line 9. If you used Com-

ing business. However, it does not in clude gain from the sale

putation B, use the amount on line 6. If you used Computa-

or oth er dis po si tion of land. You do not have to in clude all of

tion C, use the amount on line 3.

your tax able in come from farm ing on Form FIA-40, line 2.

If you used FIA-40 to ﬁ gure your tax for 2002 but did not

Your elected farm income cannot exceed your Oregon tax-

for 2003 or 2004, enter on line 5 the amount from your 2002

able income. Also, the portion of your elected farm in come

FIA-40, line 13. If you used FIA-40N, enter the amount from

treat ed as a net capital gain cannot exceed the small er of

your 2002 FIA-40N, line 9. If you used Form FIA-40P, enter

your total net capital gain or your net capital gain at trib -

the amount from your 2002 FIA-40P, line 6.

ut able to your farming business. If your elect ed farm income

in cludes net capital gain, you must al lo cate an equal por tion

If your 2002 tax able in come was -0- or less, use the worksheet

of the net cap i tal gain to each of the base years.

be low to fig ure the amount to enter on Form FIA-40, line 5.

If, for any base year, you had a capital loss that re sult ed in

NOL means net operating loss and applies to the year of the

a capital loss carryover to the next tax year, do not re duce

actual loss. NOLD means net operating loss deduction and

the elected farm income al lo cat ed to that base year by any

applies to the year the NOL is carried to.

part of the carryover.

2002 Taxable Income Worksheet

Farming business

1. Figure the taxable income from

A farming business is the trade or business of cul ti vat ing

your 2002 tax return without

land or raising or harvesting any agricultural or hor ti cul -

limiting it to -0-. Include any

tur al commodity. This includes:

NOLD carryovers or carrybacks

if you did not have a NOL in

• Operating a nursery or sod farm.

2002. Do not include any NOLD

• Raising or harvesting of trees bearing fruits, nuts, or oth er

carryover or carryback from

crops.

other years if you had a NOL

• Raising ornamental trees (but not evergreen trees that are

in 2002. Enter the result here ............... $ ___________

more than 6 years old when severed from the roots).

Instructions For 2005 Form Fia-40 - Farm Income Averaging

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