Instructions For Schedule F - Profit Or Loss From Farming

Line 34

Business use of your home. You may be able to deduct cer-

tain expenses for business use of your home, subject to limita-

Figuring your net profit or allowable loss. If line 33 is more

tions. You also may be able to use a simplified method to fig-

than line 9, don't enter your loss on line 34 until you have ap-

ure your deduction. Use the appropriate worksheets in Pub. 587

to figure your allowable deduction. Don't use Form 8829.

plied the excess farm loss rules, the at-risk rules, and the pas-

sive activity loss rules. To apply these rules, follow the instruc-

De minimis safe harbor for tangible property. You may be

tions for lines 35 and 36, and the Instructions for Form 8582.

able to elect to use a de minimis safe harbor to deduct amounts

After applying these rules, the amount on line 34 will be your

paid for certain tangible real or personal property used in your

allowable loss, and it may be smaller than the amount figured

farming business. If you elect the de minimis safe harbor for

by subtracting line 33 from line 9.

the tax year, enter the total amounts you paid for property qual-

If line 9 is more than line 33, and you don't have prior year

ifying under the de minimis safe harbor on line 32. Don’t in-

clude these amounts on any other line. For details, see chap-

unallowed passive activity losses, subtract line 33 from line 9.

The result is your net profit.

ter 1 of Pub 535.

If line 9 is more than line 33, and you have prior year unal-

Excess farm loss deduction. Any loss from this activity that

lowed passive activity losses, don't enter your net profit on

wasn't allowed last year because of the excess farm loss rules is

line 34 until you have figured the amount of prior year unal-

treated as a deduction allocable to this activity in 2017.

lowed passive activity losses you may claim this year for this

activity. Use Form 8582 to figure the amount of prior year un-

Forestation and reforestation costs. Reforestation costs are

allowed passive activity losses you may include on line 34.

generally capital expenditures. However, for each qualified

Make sure to indicate that you are including prior year passive

timber property, you can elect to expense up to $10,000

activity losses by entering "PAL" to the left of the entry space.

($5,000 if married filing separately) of qualifying reforestation

costs paid or incurred in 2017.

If you checked the "No" box on line E, see the Instructions

for Form 8582; you may need to include information from this

You can elect to amortize the remaining costs over 84

schedule on that form, even if you have a net profit.

months. For amortization that begins in 2017, you must com-

plete and attach Form 4562.

Partnerships. Subtract line 33 from line 9. If the amount is

The amortization election doesn't apply to trusts, and the ex-

a loss, the partners may need to apply the excess farm loss

pense election doesn't apply to estates and trusts. For details on

rules, the at-risk rules, and the passive activity loss rules to de-

reforestation expenses, see chapters 4 and 7 of Pub. 225.

termine the amount of their allowable loss.

Reporting your net profit or allowable loss. Once you have

Legal and professional fees. You can include on this line fees

figured your net profit or allowable loss, report it as follows.

charged by accountants and attorneys that are ordinary and

necessary expenses directly related to your farming business.

Individuals. Enter your net profit or allowable loss on

Include fees for tax advice and for the preparation of tax forms

line 34 and on Form 1040, line 18, and Schedule SE (Form

related to your farming business. Also include expenses incur-

1040), line 1a.

red in resolving asserted tax deficiencies related to your farm-

Nonresident aliens. Enter the net profit or allowable loss

ing business.

on line 34 and on Form 1040NR, line 19. You also should enter

Tools. You can deduct the amount you paid for tools that have

this amount on Schedule SE (Form 1040), line 1a, if you are

a short life or cost a small amount, such as shovels and rakes.

covered under the U.S. social security system due to an interna-

tional social security agreement currently in effect. See the In-

Travel, meals, and entertainment. In most cases, you can de-

structions for Schedule SE (Form 1040) for information on in-

duct expenses for farm business travel and 50% of your busi-

ternational social security agreements.

ness meals and entertainment. But there are exceptions and

limitations. See the Instructions for Schedule C (Form 1040),

Partnerships. Enter the net profit or loss on line 34 and on

lines 24a and 24b.

Form 1065, line 5 (or Form 1065-B, line 7). Because the excess

farm loss rules are applied at the partner level, the partnership

Preproductive period expenses. If you had preproductive pe-

will notify each partner on the Schedule K-1 if the partnership

riod expenses in 2017 that you are capitalizing, enter the total

received one of the subsidies discussed later. Each partner

of these expenses in parentheses on line 32f (to indicate a nega-

should complete one of the excess farm loss worksheets to de-

tive amount) and enter “263A” in the space to the left of the to-

termine if there is an excess farm loss.

tal.

Trusts and estates. Enter the net profit or allowable loss on

For details, see

Capitalizing costs of producing property

line 34 and on Form 1041, line 6.

and acquiring property for

resale., earlier, and Uniform Capi-

talization Rules in chapter 6 of Pub. 225.

Community income. If you and your spouse had community

income and are filing separate returns, see the Instructions for

Line 33

Schedule SE (Form 1040) before figuring self-employment tax.

Earned income credit. If you have a net profit on line 34, this

If line 32f is a negative amount, subtract it from the total of

amount is earned income and may qualify you for the earned

lines 10 through 32e. Enter the result on line 33.

F-9

Instructions For Schedule F - Profit Or Loss From Farming - 2017 Page 9

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