Instructions For Schedule J (Form 1040) - Income Averaging For Farmers And Fishermen - 2017


Department of the Treasury
Internal Revenue Service
2017 Instructions for Schedule J
Use Schedule J (Form 1040) to elect to figure your 2017 income tax by averaging,
over the previous 3 years (base years), all or part of your 2017 taxable income from
Averaging for
your trade or business of farming or fishing. This election may give you a lower tax if
your 2017 income from farming or fishing is high and your taxable income for one or
Farmers and
more of the 3 prior years was low.
In order to qualify for this election, you aren't required to have been in the business
of farming or fishing during any of the base years.
You may elect to average farming or fishing income even if your filing status
wasn't the same in the election year and the base years.
This election doesn't apply when figuring your alternative minimum tax on Form
6251. Also, you don't have to refigure, because of this election, the tax liability of any
minor child who was required to use your tax rates in the prior years.
Section references are to the Internal
tural or horticultural commodity. This
3. Any other activity which can rea-
Revenue Code unless otherwise noted.
sonably be expected to result in the
catching, taking, or harvesting of fish;
1. Operating a nursery or sod farm;
Future Developments
4. Any operations at sea in support
2. Raising or harvesting of trees
of, or in preparation for, any activity de-
For the latest information about devel-
bearing fruits, nuts, or other crops;
opments related to Schedule J (Form
scribed in (1) through (3) above;
3. Raising ornamental trees (but not
1040) and its instructions, such as legis-
5. Leasing a fishing vessel, but only
evergreen trees that are more than 6
lation enacted after they were published,
if the lease payments are (a) based on a
years old when severed from the roots);
go to
share of the catch (or a share of the pro-
4. Raising, shearing, feeding, caring
ceeds from the sale of the catch) from
for, training, and managing animals; and
the lessee's use of the vessel in a fishing
5. Leasing land to a tenant engaged
business (not a fixed payment), and (b)
in a farming business, but only if the
determined under a written lease entered
lease payments are (a) based on a share
into before the lessee begins any signifi-
Prior Year Tax Returns
of the tenant's production (not a fixed
cant fishing activities resulting in the
amount), and (b) determined under a
catch; and
You may need copies of your original or
written agreement entered into before
6. Compensation as a crew member
amended income tax returns for 2014,
the tenant begins significant activities on
on a vessel engaged in a fishing busi-
2015, and 2016 to figure your tax on
the land.
ness, but only if the compensation is
Schedule J.
A farming business doesn't include:
based on a share of the catch (or a share
If you need copies of your tax re-
of the proceeds from the sale of the
Contract harvesting of an agricul-
turns, use Form 4506. There is a fee for
tural or horticultural commodity grown
each return requested. See Form 4506
or raised by someone else, or
for the fee amount. If your main home,
The word “fish” means finfish, mol-
Merely buying or reselling plants
principal place of business, or tax re-
lusks, crustaceans, and all other forms of
or animals grown or raised by someone
cords are located in a federally declared
marine animal and plant life other than
disaster area, this fee will be waived. If
marine mammals and birds.
you want a free transcript of your tax re-
A fishing business doesn't include
turn or account, use Form 4506-T. See
Fishing business. A fishing business is
any scientific research activity conduc-
your Form 1040 instructions to find out
the trade or business of fishing in which
ted by a scientific research vessel.
how to get these forms.
the fish harvested, either in whole or in
Settlement from Exxon Valdez liti­
part, are intended to enter commerce or
Keep a copy of your 2017 income tax
gation. You will be treated as engaged
enter commerce through sale, barter, or
return to use for income averaging in
in a fishing business with respect to any
trade. This includes:
2018, 2019, or 2020.
qualified settlement income you re-
1. The catching, taking, or harvest-
ceived if either of the following applies.
ing of fish;
1. You were a plaintiff in the civil
2. The attempted catching, taking,
Farming business. A farming business
or harvesting of fish;
is the trade or business of cultivating
land or raising or harvesting any agricul-
Aug 01, 2017
Cat. No. 25514J


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