Fillable Pa Schedule F (Form Pa-40 F) - Farm Income And Expenses (Page 2 of 4) in pdf

PA-40 F (09–14)

PA Schedule F

PA DEPARTMENT OF REVENUE

Farm Income and Expenses

preparation, veterinary, farm labor, horticultural or management for a

unless not using an optional accelerated depreciation method. You need

fee or on a contract basis, use the most appropriate federal Principal

straight-line depreciation to take advantage of Pennsylvania’s Tax Benefit

Agricultural Activity Codes from Part IV of Federal Schedule F shown on

Rule when you sell the asset.

side 2 of the PA Schedule F.

You must use the straight-line depreciation method if your PA basis and

B. Principal Product. Describe in one or two words your principal crop

federal a basis for an asset differ.

or output for the current year.

Line 16b. Section 179 expense. Current expensing is limited to the

Disposition of Payments-In-Kind Commodities.

expensing allowed at the time you placed the asset into service, or the

If you disposed of commodities received under the payments-in-kind

expensing in effect under the IRC of 1986 as amended Jan. 1, 1997.

program, fill in the oval for the description(s) that apply.

Pennsylvania follows the federal definitions for listed property.

Enter your federal Employer Identification Number (FEIN). If you do not

Line 17. Employee benefit programs other than on Line 28.

have an FEIN, leave this space blank.

You may not deduct any payments you make for your own personal

coverage.

Enter your PA Sales Tax License Number if you have one, or leave this

space blank.

Line 22. Insurance.

You

may

deduct

life

insurance

Part I. Farm Income – Cash Method – Complete Parts I and II.

yourself or your spouse only if the farm business itself (not your spouse,

other family members or other persons) is the beneficiary. The farm

Line 5a. and 5b. On Line 5a, show your total distributions from

business must use the insurance proceeds to continue its operations. If

cooperatives,

including

patronage

dividends,

nonpatronage

deducting insurance premiums, proceeds received are business income

distributions,

per-unit

retain

allocations

and

redemption

on Line 11 of Part I.

nonqualified notices and per-unit allocations.

Line 23. Labor hired. Do not reduce your wage expense for any feder-

Show patronage dividends (distributions) received in cash and the dollar

al credits you claim. Add back any wage expenses you excluded to claim

amount of qualified written notices of allocation. If you received proper-

a federal credit. Do not deduct the costs of your own participation.

ty as patronage dividends, report the fair market value of the property

as income.

Line 27. Other interest. Do not deduct personal interest. If you

personally borrow money to acquire a farm or farm interest or to

On Line 5b, enter patronage dividends from buying personal or family

improve your farm, you may not deduct the interest on any PA schedule

items, capital assets or depreciable assets.

or tax return. If the farm business itself incurs debt, it may deduct the

Line 7b. Materials and services. Include the amount from 1099-G,

interest expense.

Box 9, Market Gain, associated with any Commodity Credit Corporation

(CCC) loan where the proceeds from the loan were not originally

Line 34. Taxes. You may deduct tax expenses other than taxes based

elected to be included as income. Write ”Market Gain” in the space to

on income. You may not deduct taxes based on net income, federal

right of “Materials and services” when including an amount from this

income taxes and one-half of the self-employment taxes that the IRS

source. Include a schedule if more than one type of income is reported

allows. You may not deduct taxes paid to other states or foreign

on this line.

countries based on income. You may not deduct estate taxes and

inheritance, legacy, succession and gift taxes. Assessments for

Line 11. Other Income. Enter gross proceeds you may have to report

betterments and improvements are not allowable.

elsewhere on your federal tax return. Include the income from the sale

of business assets you reinvested and used to acquire similar business

Line 37. Other expenses. You may deduct any other cost of operations

assets. Also include the gain or loss on replacing business property

that are ordinary, necessary, reasonable and current expenses of your

(including land or buildings used by the facility in the operation of a farm)

farm business.

and interest and dividend income from investments that generated

• You may deduct 100 percent of the sales tax paid on a depreciable

working capital. Include other income as described for Line 10 of Federal

asset. However, on disposition, your PA basis and federal basis for that

Schedule F. PA PIT law and regulations do not limit depreciation when

asset will differ.

business property use (or the inclusion amount on leased property

• You may deduct charitable contributions made from your farm

adjustment) falls below 50 percent. You may deduct the allowable

account and acknowledged publicly by the recipient. Personal

business depreciation as described below on such property. Do not report

charitable contributions are not allowable.

"depreciation recapture" for PA Personal Income Tax purposes.

• You may use the capitalization rules established by your industry,

Part II. Farm Deductions – Cash and Accrual Method.

under its generally accepted accounting principles and practices. Once

Include current expenses that are ordinary, necessary and reasonable for

elected, you must consistently use this method.

producing farming income. Do not include personal or living expenses.

• You may deduct 100 percent of expenses for removing barriers to

PA law does not impose dollar or percentage limitations on allowable

individuals with disabilities and the elderly. You may not take the

expenses. You may always deduct 100 percent of the PA allowable farm

federal credit on your PA return.

expenses that you incurred during the taxable year.

Line 15. Conservation expenses. You may deduct certain expendi-

• You may deduct home office expenses. Pennsylvania generally follows

tures (including any amount paid on any assessment levied by a soil or

the federal rules for a home office. Itemize any other expenses that

are allowable under GAAP or FASB rules but are not allowable or

water conservation or drainage district to defray expenditures made) for

soil or water conservation and the prevention of erosion if the expendi-

limited under federal rules.

tures are in respect of land you use. The allowable deduction for any one

Line 39. Enter expenses you incurred that qualified you to take a PA

year may not exceed 25 percent of your gross income from farming, but

Employment Incentive Payments Tax Credit, PA Job Creation Tax Credit

any excess may be carried over to succeeding years with the same limit

and/or the PA Research and Development Tax Credit. You cannot take

applying to those years.

these expenses and also receive the credit on your PA-40.

To claim a deduction for these expenditures, you must elect to do so by

claiming the deduction on your return for the first taxable year for which

Line 46. Other Income. Enter transactions you may have to report

the expenditures are paid. Once you have elected to treat the expendi-

elsewhere on your federal tax return, such as the sale of business assets,

tures as deductions, you must continue to do so in all future taxable

gain or loss on replacing business property (other than land or buildings)

years unless you secure consent to change.

and income from short-term investments to generate working capital.

Include other income as described for Line 44 of Federal Schedule F.

Line 16a. Regular Depreciation. You may use any depreciation

However, PA laws and regulations do not limit depreciation as described

method permissable under accepted accounting principles and practices

above when farming property use (or the inclusion amount on leased

as long as you consistently apply the method.

property adjustment) falls below 50 percent. Deduct the allowable

business depreciation on such property.

NOTE: For each asset, you must also report straight-line depreciation,

PAGE 2

Pa Schedule F (Form Pa-40 F) - Farm Income And Expenses Page 2

Related Articles

Related forms

Related Categories