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89-095-CV (HRH) (Consolidated) (D.

considered to be within a reasonable

You don't have to include all of

Alaska); or

time.

your taxable income from farm-

TIP

ing or fishing on line 2a. It may

2. All of the following apply.

Elected farm income doesn't include

be to your advantage to include less

a. You were a beneficiary of a

income, gain, or loss from the sale or

than the entire amount, depending on

plaintiff described in (1) above.

other disposition of land or from the sale

how the amount you include on line 2a

of development rights, grazing rights,

b. You acquired the right to receive

affects your tax bracket for the current

and other similar rights.

qualified settlement income from that

and prior 3 tax years.

plaintiff.

You should find your income, gains,

If you received certain subsidies in

c. You were the spouse or an imme-

losses, and deductions from farming or

2017, your elected farm income can't in-

diate relative of that plaintiff.

fishing reported on different tax forms,

clude excess farm losses. See the In-

such as:

Qualified settlement income is any

structions for Schedule F (Form 1040).

2017 Form 1040, line 7, or Form

taxable interest and punitive damage

1040NR, line 8, income from wages and

Your elected farm income can't ex-

awards you received (whether as lump

other compensation you received (a) as a

ceed your taxable income.

sums or periodic payments) in connec-

shareholder in an S corporation engaged

tion with the Exxon Valdez civil action

in a farming or fishing business, or (b)

Lines 2b and 2c

described above. Qualified settlement

as a crew member on a vessel engaged

income includes all such awards, wheth-

Complete lines 2b and 2c if the amount

in a fishing business (but see Fishing

er received before or after the judgment

of your elected farm income on line 2a

business, earlier);

and whether related to a settlement or a

2017 Form 1040, line 21, or Form

includes net capital gain. Net capital

judgment.

1040NR, line 21, income from Exxon

gain is the excess, if any, of net

Additional Information

Valdez litigation;

long-term

capital

gain

over

net

short-term capital loss.

2017 Form 1040, line 27, or Form

See Pub. 225 and Regulations section

1040NR, line 27, deductible part of

Line 2b. Enter on line 2b the portion of

1.1301-1 for more information.

self-employment tax, but only to the ex-

your elected farm income on line 2a

tent that deduction is attributable to your

treated as a net capital gain. The amount

farming or fishing business;

Specific

you enter on line 2b can't exceed the

2017 Form 1040, line 43, or Form

smaller of your total net capital gain or

Instructions

1040NR, line 41, CCF reduction, except

the net capital gain attributable to your

to the extent that any earnings (without

farming or fishing business.

regard to the carryback of any net oper-

Line 2a

Line 2c. Enter on line 2c the smaller of

ating or net capital loss) from the opera-

line 2b or the unrecaptured section 1250

tion of agreement vessels in the fisheries

Elected Farm Income

gain attributable to your farming or fish-

of the United States or in the foreign or

ing business, if any.

domestic commerce of the United States

To figure your elected farm income, first

aren't attributable to your fishing busi-

figure your taxable income from farm-

Line 4

ing or fishing. This includes all income,

ness;

Schedule C or C-EZ;

gains, losses, and deductions attributable

Figure the tax on the amount on line 3

Schedule D;

to your farming or fishing business. If

using:

Schedule E, Part II;

you conduct both farming and fishing

The 2017 Tax Table, Tax Compu-

Schedule F;

businesses, you must figure your elected

tation Worksheet, or Qualified Divi-

Form 4797;

farm income by combining income,

dends and Capital Gain Tax Worksheet

gains, losses, and deductions attributable

Form 4835;

from the 2017 Instructions for Form

Form 8903, Domestic Production

to your farming and fishing businesses.

1040 or Form 1040NR;

Activities Deduction, but only to the ex-

The 2017 Foreign Earned Income

Elected farm income also includes

tent that deduction is attributable to your

Tax Worksheet from the 2017 Instruc-

any gain or loss from the sale or other

farming or fishing business; and

tions for Form 1040; or

disposition of property regularly used in

Form 8949.

The Schedule D Tax Worksheet in

your farming or fishing business for a

the 2017 Instructions for Schedule D.

Your elected farm income is the

substantial period of time. However, if

amount of your taxable income from

such gain or loss is realized after cessa-

Enter the tax on line 4.

farming or fishing that you elect to in-

tion of the farming or fishing business,

Line 5

clude on line 2a.

the gain or loss is treated as attributable

to a farming or fishing business only if

If you used Schedule J to figure your tax

the property is sold within a reasonable

for:

time after cessation of the farming or

2016 (that is, you entered the

fishing business. A sale or other disposi-

amount from the 2016 Schedule J,

tion within 1 year of the cessation is

line 23, on your 2016 Form 1040,

line 44, on your 2016 Form 1040NR,

J-2

Instructions For Schedule J (Form 1040) - Income Averaging For Farmers And Fishermen - 2017 Page 2

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