Instructions For Form Fia-40n, Form Fia-40p, And Schedule Z, For Farm Income Averaging

2003

Instructions for Form FIA-40N, Form FIA-40P,

O R E G O N

D E PA R T M E N T

and Schedule Z, for Farm Income Averaging

O F R E V E N U E

A farming business does not include:

You may elect to figure your 2003 tax by averaging, over the

previous three years (base years), all or part of your 2003 tax-

• Contract harvesting of an agricultural or horticultural com-

able farm income.

modity grown or raised by someone else, or

• Merely buying or reselling plants or animals grown or raised

You will need copies of your original or amended

by someone else.

Oregon income tax returns for tax years 2000, 2001, and 2002

to figure your tax on Form FIA-40P or Form FIA-40N. You can

Instructions for Schedule Z

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

Department of Revenue. See Taxpayer Assistance on page 8 for

You will need to complete Form FIA-40N through line 10 or

numbers to call.

Form FIA-40P through line 9 before you can complete Sched-

ule Z. You will need the figure from line 2(b) of Form FIA-40N

Elected farm income

or FIA-40P to recalculate Oregon tax for tax years 2000, 2001, and

2002. On Schedule Z, complete either Computation A, B, or C

Your elected farm income is the amount of your taxable income

for each tax year. Figures from Schedule Z are needed to com-

from farming that you elect to include on Form FIA-40P or FIA-

plete Form FIA-40, lines 8, 12, and 16; Form FIA-40N, lines 11

40N, line 2. Do not enter more than the amount on line 1.

through 13; or Form FIA-40P, lines 10 through 12.

To figure elected farm income, first figure your taxable income

If you were a part-year resident or a nonresident for 2000, 2001,

from farming. Taxable income from farming includes all in-

or 2002 and if your income after subtractions (line 39) for either

come, gains, losses, and deductions attributable to any farming

federal or Oregon was zero or less for any of these three tax

business. However, it does not include gain from the sale or

years, use the worksheets below to figure the amount to enter

other disposition of land. Gains and losses must be from prop-

on Schedule Z, Computation A or B, line 1.

erty (other than land) regularly used by you in the farm busi-

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

ness for a substantial period of time. Oregon source farm

actual loss. NOLD means net operating loss deduction and

income includes income or loss received from an Oregon farm

while you were a nonresident and farm income or loss received

applies to the year the NOL is carried to.

during any portion of the year you were an Oregon resident.

2000 Taxable Income Worksheet

You do not have to include all of your taxable income from

Part-Year or Nonresident Return for 2000

farming on Form FIA-40P or FIA-40N, line 2.

Oregon (b)

Federal (a)

1. Figure income after subtrac-

Your elected farm income cannot exceed your Oregon taxable

tions for either federal or

income. Also, the portion of your elected farm income treated

Oregon, or both, from your

as a net capital gain cannot exceed the smaller of your total net

2000 Form 40P or Form 40N

capital gain or your net capital gain attributable to your farm-

without limiting it to -0-.

ing business.

Include any NOLD carry-

overs or carrybacks if you

If your elected farm income includes net capital gain, you must

did not have a NOL in

allocate an equal portion of the net capital gain to each of the

2000. Do not include any

base years.

NOLD carryover or carry-

If, for any base year, you had a capital loss that resulted in a

back from other years if

capital loss carryover to the next tax year, do not reduce the

you had a NOL in 2000.

elected farm income allocated to that base year by any part of

Enter the result here .................... $ ________ $ ________

the carryover.

2. You must make an addi-

tional computation if you

Farming business

have a capital loss and a

NOL in either or both

A farming business is the trade or business of cultivating land

columns on Form 40P or

or raising or harvesting any agricultural or horticultural com-

Form 40N. If there is a loss

modity. This includes:

on your 2000 federal

Schedule D, line 18, add

• Operating a nursery or sod farm.

that loss (as a positive

• Raising or harvesting trees bearing fruits, nuts, or other crops.

• Raising ornamental trees (but not evergreen trees that are

amount) and your 2000

capital loss carryover to

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

2001. Subtract from that

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

sum the amount of the

ing animals.

loss on your 2000 federal

• Leasing land to a tenant engaged in a farming business, but

only if the lease payments are based on a share of the tenant’s

Schedule D, line 17. Enter

the result here ............................... $ ________ $ ________

production (not a fixed amount).

3. If you had an NOL for

• Wages and other compensation you received as a shareholder

2000 for federal only, enter

in an S corporation engaged in a farming business.

150-101-161 (Rev. 12-03)

Instructions For Form Fia-40n, Form Fia-40p, And Schedule Z, For Farm Income Averaging - 2003

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