Form Ct-47-I - Instructions For Form Ct-47 - Claim For Farmers' School Tax Credit - 1998 Page 3
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4CT-47-I (1998) Page 3
Worksheet A
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Enter your entire net income from Form CT-3 or CT-3-A, line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Enter the amount of principal paid on farm indebtedness during 1998
. . . . . . . . . . . . . . . . . . . . 2
(see instructions below)
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Subtract line 2 from line 1. If result is less than $150,000, check the Yes box in item C. . . . . . . . . . . . . . . . . . . . . . . . . 3
Farm indebtedness is debt incurred or refinanced that is secured by farm property, where the proceeds of the debt are
used for expenditures incurred in the business of farming. Debt or that portion of debt that is secured by a residence does
not qualify, even if the proceeds of the loan are used for farm expenditures.
Item D - Complete Worksheet B below.
Worksheet B (to be completed by Form CT-3 and CT-3-A filers)
Keep for your records.
1 Add the amounts on federal Form 1120 or 1120-A, lines 3 through 7, and 10
(see instructions) . . . . . . . . . . . . . . . .
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2 Add the gain (not loss) amounts on federal Schedule D (Form 1120), column (f), lines 1, 2, 3, 6, 8, and 9
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(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 Add the gain (not loss) amounts on federal Form 4797, column g, lines 2 through 6, 10, and 13 through 17
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(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Add the amounts on federal Schedule K-1 (Form 1065), lines 15b and 15c (less any partnership items
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included on lines 1 through 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Add lines 1 through 4. This is your federal gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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6 Subtract $30,000 from line 5. This is your excess federal gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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7 Gross profit from farming included on federal Form 1120 or 1120-A, line 3
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(see instructions) . . . . . . . . . . . . . . . . . . .
8 Gross rents from certain rentals of farm property included on federal Form 1120 or 1120-A, line 6
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(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 Add the amounts on federal Form 4797, column g, that represent gains from the sale of livestock used for
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draft, breeding, sport or dairy purposes
(see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Enter the amount from federal Schedule K-1 (Form 1065), line 15b
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(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . .
11 Add lines 7 through 10. This is your gross income from farming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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12 Divide line 11 by line 6, and carry the result to four decimal places . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Instructions for Worksheet B
Line 1 - If federal Form 1120 or 1120-A, line 10, includes both income and loss
situation, it may be helpful if the corporation completes a pro-forma federal
items, include only the income amounts on line 1. In addition, do not include on
Schedule F (Form 1040), to determine its gross profit (income) from farming.
line 1 any partnership income included on federal Form 1120 or 1120-A, line 10.
Line 8 - Include only gross rents from the rental of farm property, and only if the
rental arrangement meets one of the two conditions listed under Purpose of Form.
Line 2 - Include on line 2 only gains used in figuring the amounts reported in
column (f) of Schedule D. Loss transactions cannot be netted against gain
Line 9 - Include on line 9 only gains (not losses) reported on Form 4797 that
transactions.
represent gains from the sale of livestock used for draft, breeding, sport or dairy
Line 3 - Include on line 3 only gains used in figuring the amounts entered in
purposes. Do not include any other gains reported on Form 4797 (such as gains
column (g) for Form 4797. Loss transactions cannot be netted against gain
from the sale of farm machinery) even though these gains may be related to your
transactions.
farming business.
Line 7 - If the corporation has both farm and non-farm income, include in line 7
Line 10 - Do not include on line 10 gross income from fishing included on federal
only the gross profit attributable to farming activities (see Purpose of Form). In this
Schedule K-1, line 15b.
Item E - If you and one or more related persons each
individual owns 100% of the stock of both corporations.
owned qualified agricultural property on March 1, 1998,
Corporations A and B are related persons.
check the box on Item E. Also, be sure to read the
Item F - You cannot claim the farmers’ school tax credit for
instructions for Part II, line 4.
qualified agricultural property which is converted to
A related person includes:
nonqualified use during the tax year. If only part of your
– another corporation subject to the corporation franchise
qualified agricultural property is converted to nonqualified
tax (Article 9-A) where both corporations are members of
use during the tax year, you can claim credit for the part of
the same controlled group as defined in section 267(f) of
the property which is not converted.
the Internal Revenue Code;
In addition, you may be subject to the recapture provision
– an individual, estate or trust that owns more than 50% of
(see Credit Recapture on page 4).
the corporation’s stock;
Conversion to nonqualified use means an outward or
– another corporation subject to tax under the Article 9-A
affirmative act changing the use of agricultural land. The
franchise tax if the same person owns more than 50% of
the value of the outstanding stock of each corporation;
idling, nonuse or sale of the land is not by itself a
and
conversion.
– an estate or trust of which the corporation owns, directly
Example 1: You sell 100 acres of land to a developer in
or indirectly, more than 50% of the capital, profits or
1998. The developer actually builds a housing
beneficial interest.
development on the land during 1998, and as a result the
land is no longer used in agricultural production. This is a
Example: Corporation A and Corporation B each own
qualified agricultural property on March 1, 1998. The same
conversion to nonqualified use.
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