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Department of the Treasury
Internal Revenue Service

2023 Instructions for Schedule F
Use Schedule F (Form 1040) to report farm income and expenses. File it with Form
Profit or Loss 1040, 1040-SR, 1040-SS, 1040-NR, 1041, or 1065.
Your farming activity may subject you to state and local taxes and other require-
From Farming ments such as business licenses and fees. Check with your state and local governments
for more information.
Additional information. Pub. 225 has more information and examples to help you
complete your farm tax return. It also lists important dates that apply to farmers.

Section references are to the Internal Revenue Code unless Deduction for qualified business income. For tax years be-
otherwise noted.
ginning after 2017, you may be entitled to a deduction of up to
20% of your qualified business income from your qualified
Future Developments trade or business, plus 20% of the aggregate amount of quali-
For the latest information about developments related to Sched- fied real estate investment trust (REIT) dividends and qualified
ule F (Form 1040) and its instructions, such as legislation enac- publicly traded partnership (PTP) income. The deduction is
ted after they were published, go to IRS.gov/ScheduleF. subject to various limitations, such as limitations based on your
type of trade or business, your taxable income, the amount of
What's New W-2 wages paid with respect to the trade or business, and the
unadjusted basis immediately after acquisition of qualified
Standard mileage rate. The business standard mileage rate is property held by the trade or business.
65.5 cents a mile.
Special rules also exist for patrons of specified agricultural
Business meals deduction. The temporary 100% deduction or horticultural cooperatives, including the following.
for food or beverages provided by a restaurant has expired. The Distributions from a cooperative that are included in a pa-
•
business meal deduction reverts back to the previous 50% al- tron's qualified business income and are identified on the Form
lowable deduction beginning January 1, 2023. See Travel and 1099-PATR as qualified payments are subject to the patron re-
meals, later, for more information. duction.
Form 1040-SS, Part III, has been replaced. For 2023, • A cooperative's section 199A(g) deduction passed
Schedule F (Form 1040) is available to be filed with Form through to a patron on the Form 1099-PATR is included in the
1040-SS, if applicable. For additional information, see the In- patron's qualified business income deduction.
structions for Form 1040-SS. You will claim the deduction for qualified business income
Farmers and ranchers affected by drought may be eligible on Form 1040 or 1040-SR. This deduction can be taken in ad-
for extension of tax relief. Farmers and ranchers forced to sell dition to the standard or itemized deductions. For more infor-
certain livestock because of drought conditions may have more mation, see the Instructions for Form 1040 and Pub. 334, Tax
time to replace their livestock and defer tax on any gains from Guide For Small Business.
the forced sales. See IRS Tax Tip 2022-152 and IRS extends Net operating loss (NOL). An NOL can no longer be carried
relief to farmers and ranchers in 49 states and other areas. back, unless the NOL is a farming loss. If you have an NOL
attributable to farming, you must carry it back to each of the 2
tax years preceding the tax year of the loss, unless you elect to
Reminders forgo the carryback. Farming businesses can elect to forgo the
carryback and carry forward the farm NOL to a later year. For
Business interest expense limitation. For tax years beginning additional information on NOLs for individuals, estates and
after 2017, your business interest expense deduction may be trusts, and corporations, see Pubs. 225 and 536.
limited. See Form 8990, Limitation on Business Interest Ex-
pense under Section 163(j), and its instructions for details. Small business taxpayers. For tax years beginning after
2017, more small business taxpayers may be eligible to use the
Excess business loss limitation rules. The limitation on ex- cash method of accounting. See Small business taxpayer.
cess business losses for noncorporate taxpayers is applicable
for 2023. See Form 461, Limitation on Business Losses, and its
instructions for details on the amount of the excess business
loss limitation.
Form 7205, Energy Efficient Commercial Buildings Deduc-
tion. This form and its separate instructions are used to claim
the section 179D deduction for qualifying energy efficient
commercial building expenses.

Jan 2, 2024 Cat. No. 17152R F-1

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Single-member limited liability company (LLC). Generally,
General Instructions a single-member domestic LLC isn't treated as a separate entity
for federal income tax purposes. If you are the sole member of
Other Schedules and Forms You May Have a domestic LLC engaged in the business of farming, file
To File Schedule F (Form 1040). However, you can elect to treat a do-
• Schedule E (Form 1040), Part I, to report rental income mestic LLC as a corporation. See Form 8832 for details on the
from pastureland based on a flat charge, and to report farm election.
rental income and expenses of a trust or estate based on crops Heavy highway vehicle use tax. If you use certain highway
or livestock produced by a tenant. However, report pasture trucks, truck-trailers, tractor trailers, or buses in your farming
income received from taking care of someone else’s livestock business, you may have to pay a federal highway motor vehicle
on Schedule F (Form 1040), line 8. use tax. See the Instructions for Form 2290 to find out if you
• Schedule J (Form 1040) to figure your tax by averaging owe this tax and go to IRS.gov/Trucker for the latest develop-
your farm income over the previous 3 years. Doing so may ments.
reduce your tax. Information returns. You may have to file information re-
• Schedule SE (Form 1040) to pay self-employment tax on turns for wages paid to employees, certain payments of fees
income from your farming business. and other nonemployee compensation, interest, rents, royalties,
• Form 461 to figure excess business loss. real estate transactions, annuities, and pensions. For details, see
• Form 3800 to claim any general business credits. Line F, later, and the 2023 General Instructions for Certain In-
• Form 4562 to claim depreciation (including the special formation Returns.
allowance) on assets placed in service in 2023, to claim
If you received cash of more than $10,000 in one or more
amortization that began in 2023, to make an election under
related transactions in your farming business, you may have to
section 179 to expense certain property, or to report
file Form 8300. For details, see Pub. 1544.
information on vehicles and other listed property.
• Form 4684 to report a casualty or theft gain or loss Reportable transaction disclosure statement. If you entered
involving farm business property, including purchased into a reportable transaction in 2023, you must file Form 8886
livestock held for draft, breeding, sport, or dairy purposes. See to disclose certain information as required by Treas. Reg. sec-
Pub. 225 for more information on how to report various farm tion 1.6011-4 and the Instructions for Form 8886. You may
losses, such as losses due to death of livestock or damage to have to pay a penalty if you are required to file Form 8886 but
crops or other farm property. don't do so. You may also have to pay interest and penalties on
• Form 4797 to report sales, exchanges, or involuntary any reportable transaction understatements. For more informa-
conversions (other than from a casualty or theft) of certain farm tion on reportable transactions, see the Instructions for Form
property. Also, use this form to report sales of livestock held 8886.
for draft, breeding, sport, or dairy purposes.
• Form 4835 to report rental income based on crop or Farm Owned and Operated by Spouses
livestock shares produced by a tenant if you didn't materially If you and your spouse jointly own and operate a farm as an
participate in the management or operation of a farm. This unincorporated business and share in the profits and losses, you
income isn't subject to self-employment tax. See Pub. 225. can file Form 1065 and be taxed as a partnership, or you each
• Form 6198 to figure your allowable loss if you have a can file Schedule F (Form 1040) as a qualified joint venture.
business loss and you have amounts invested in the business
for which you aren't at risk. Qualified Joint Venture (QJV)
• Form 7205 to claim the section 179D deduction for
If you and your spouse each materially participate as the only
qualifying energy efficient commercial building.
members of a jointly owned and operated farm, and you file a
• Form 8300 to report cash payments over $10,000
joint return for the tax year, you can elect to be treated as a
received in a trade or business.
QJV instead of a partnership. This election in most cases won't
• Form 8582 to figure your allowable loss from passive
increase the total tax owed on the joint return, but it does give
activities.
each of you credit for social security earnings on which retire-
• Form 8824 to report like-kind exchanges of business or
ment benefits are based and for Medicare coverage without fil-
investment property.
ing a partnership return. For an explanation of “material partic-
• Form 8990 to figure any amount of business interest
ipation,” see the instructions for Schedule C (Form 1040), line
expense that is not subject to the interest expense limitation and
G; and Line E, later.
to figure the amount you can carry forward. However, a small
business taxpayer is not subject to the business interest expense Making the election. To make this election, you must divide
limitation and is not required to file Form 8990. Also, certain all items of income, gain, loss, deduction, and credit attributa-
farming businesses and specified agricultural or horticultural ble to the farming business between you and your spouse in ac-
cooperatives can make an election not to have the limitation cordance with your respective interests in the venture. Each of
apply. you must file a separate Schedule F (Form 1040). On each line
• Form 1045 to request a refund such as resulting from a of your separate Schedule F (Form 1040), you must enter your
carryback loss. share of the applicable income, deduction, or loss. Each of you

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must also file a separate Schedule SE (Form 1040) to pay
self-employment tax, as applicable. Line C
As long as you remain qualified, your election can't be re- If you use the cash method, check the box for “Cash.” Com-
voked without IRS consent. plete Schedule F (Form 1040), Parts I and II. In most cases, re-
port income in the year in which you actually or constructively
For more information on QJVs, go to IRS.gov/QJV.
received it and deduct expenses in the year you paid them.
However, if the payment of an expenditure creates an intangi-
Exception—Community Income ble asset (such as a prepaid expense) having a useful life that
If you and your spouse wholly own an unincorporated farming extends beyond the earlier of 12 months after the creation of
business as community property under the community property the benefit or the end of the next tax year, it may not be deduc-
laws of a state, foreign country, or U.S. possession, you can tible or may be deductible only in part for the year of the pay-
treat your wholly owned, unincorporated business as a sole ment. See chapter 2 of Pub. 225.
proprietorship, instead of a partnership. Any change in your re-
porting position will be treated as a conversion of the entity. If you use the accrual method, check the box for “Accrual.”
Report your income and deductions as follows. Complete Schedule F (Form 1040), Part I, line 9; and Part II;
• If only one spouse participates in the business, all of the and Part III. Generally, report income in the year in which you
income from that business is the self-employment earnings of earned it and deduct expenses in the year you incurred them,
the spouse who carried on the business. even if you didn't pay them in that year. Accrual-basis taxpay-
• If both spouses participate, the income and deductions are ers are put on a cash basis for deducting business expenses ow-
allocated to the spouses based on their distributive shares. ed to a related cash-basis taxpayer. Other rules determine the
• If either or both you and your spouse are partners in a timing of deductions based on economic performance. See Pub.
partnership, see Pub. 541. 538, Accounting Periods and Methods.
• If you and your spouse elected to treat the business as a Farming syndicates. Farming syndicates can't use the cash
QJV, see Qualified Joint Venture (QJV), earlier, for how to re- method of accounting. A farming syndicate may be a partner-
port income and deductions. ship, an LLC, an S corporation, or any other enterprise other
States with community property laws include Arizona, Cali- than a C corporation if:
fornia, Idaho, Louisiana, Nevada, New Mexico, Texas, Wash- • The interests in the business have at any time been of-
ington, and Wisconsin. See Pub. 555 for more information fered for sale in a way that would require registration with any
about community property laws. federal or state agency, or
• More than 35% of the losses during any tax year are allo-
Estimated Tax cable to limited partners or limited entrepreneurs. A limited
If you had to make estimated tax payments for 2023, and you partner is one who can lose only the amount invested or re-
underpaid your estimated tax, you won't be charged a penalty if quired to be invested in the partnership. A limited entrepreneur
both of the following apply. is a person who doesn't take any active part in managing the
• Your gross farming or fishing income for 2022 or 2023 is business.
at least two-thirds of your gross income.
• You file your 2023 tax return and pay the tax due by Line D
March 1, 2024. Enter on line D the EIN that was issued to you on Form SS-4.
For details and alternative ways to avoid the estimated tax Don't enter your SSN. Don't enter another taxpayer's EIN (for
penalty, see the Instructions for Form 2210-F and chapter 15 of example, from any Forms 1099-MISC that you received). If
Pub. 225. you don't have an EIN, leave line D blank.

You need an EIN only if you have a qualified retirement
plan or are required to file employment, excise, alcohol, tobac-
Specific Instructions co, or firearms returns, or if you are a payer of gambling win-
nings. If you need an EIN, see the Instructions for Form SS-4.
Filers of Forms 1041 and 1065. Don't complete the block la-
Single-member LLCs. If you are a sole owner of an LLC that
beled “Social security number (SSN).” Instead, enter the em-
isn't treated as a separate entity for federal income tax purpo-
ployer identification number (EIN) issued to the estate, trust, or
ses, you may have an EIN that was issued to the LLC (and in
partnership on line D.
the LLC's legal name) if you are required to file employment
tax returns and certain excise tax returns. However, you should
Line B enter on line D only the EIN issued to you and in your
On line B, enter one of the 17 principal agricultural activity co- name as the sole proprietor of your farming business. If you
des listed in Part IV on page 2 of Schedule F (Form 1040). Se- don't have such an EIN, leave line D blank. Don't enter on line
lect the code that best describes the source of most of your in- D the EIN issued to the LLC.
come. Single-member LLCs with employees. Single-member LLCs
that are disregarded as entities separate from their owners for
federal income tax purposes are required to file employment
tax returns using the LLC's name and EIN rather than the LLC

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owner's name and EIN. For more information, see the Instruc-
tions for Form SS-4. Part I. Farm Income—Cash
Filers of Forms 1041 and 1065. Enter on line D the EIN is-
sued to the estate, trust, or partnership. Method
In Part I, show income received for items listed on lines 1
Line E through 8. In most cases, include both the cash actually or con-
structively received and the fair market value (FMV) of goods
Material participation. For the definition of material partici- or other property received for these items. Income is construc-
pation for purposes of the passive activity rules, see the instruc- tively received when it's credited to your account or set aside
tions for Schedule C (Form 1040), line G. If you meet any of for you to use.
the material participation tests described in those instructions, If you received rents based on crop shares or farm produc-
check the “Yes” box. tion and materially participated in the management or operation
If you are a retired or disabled farmer, you are treated as of a farm, report these rents as income on line 2.
materially participating in a farming business if you materially Sales of livestock because of weather-related conditions. If
participated 5 or more of the 8 years preceding your retirement you sold livestock because of drought, flood, or other weath-
or disability. Also, a surviving spouse is treated as materially er-related conditions, you can elect to report the income from
participating in a farming activity if the surviving spouse ac- the sale in the year after the year of sale if all of the following
tively manages the farm and the real property used for farming apply.
meets the estate tax rules for special valuation of farm property • Your main business is farming.
passed from a qualifying decedent. • You can show that you sold the livestock only because of
Check the “No” box if you didn't materially participate. If weather-related conditions.
you checked “No” and you have a loss from this business, see • Your area qualified for federal aid.
Limit on passive losses next. If you have a profit from this See chapter 3 of Pub. 225 for details.
business activity but have current year losses from other pas-
Chapter 11 bankruptcy. If you were a debtor in a chapter 11
sive activities or prior year unallowed passive activity losses,
bankruptcy case during 2023, see Chapter 11 Bankruptcy Ca-
see the Instructions for Form 8582.
ses in the Instructions for Form 1040 (under Income) and the
Limit on passive losses. If you checked the “No” box and you Instructions for Schedule SE (Form 1040).
have a loss from this business, you may have to use Form 8582
Forms 1099 or CCC-1099-G. If you received Forms 1099 or
to figure your allowable loss, if any, to enter on Schedule F
CCC-1099-G showing amounts paid to you, first determine if
(Form 1040), line 34. In most cases, you can deduct losses
the amounts are to be included with farm income. Then, use the
from passive activities only to the extent of income from pas-
following chart to determine where to report the income on
sive activities. For details, see Pub. 925.
Schedule F (Form 1040). Include the Form 1099 or
Note. Form 1040-SS filers, skip this line. CCC-1099-G amounts in the total amount reported on that line.

Where to
Line F Form report
If you made any payments in 2023 that would require you to 1099-PATR . . . . . . . . . . . . . . . . . . . . . . . Line 3a
file any Forms 1099, check the “Yes” box. Otherwise, check 1099-A . . . . . . . . . . . . . . . . . . . . . . . . . Line 5b
the “No” box. See the 2023 General Instructions for Certain In- 1099-MISC for crop insurance . . . . . . . . . . . . Line 6a
formation Returns in Guide to Information Returns if you are 1099-G or CCC-1099-G
unsure whether you are required to file any Forms 1099. Also • For disaster payments . . . . . . . . . . . . . Line 6a
see the separate specific instructions for each Form 1099. • For other agricultural program payments . . Line 4a

Note. Form 1040-SS filers, skip this line and Line G.
Generally, you must file Form 1099-MISC or Form You may receive Form 1099-MISC for other types of in-
TIP 1099-NEC if you paid at least $600 in rents, services, come. In this case, report it on whichever line best describes
prizes, medical and health care payments, and other the income. For example, if you receive a Form 1099-MISC for
income payments. See the Guide to Information Returns in the custom farming work, include this amount on line 7. In most
2023 General Instructions for Certain Information Returns cases, your business income will be in the form of cash,
which has more information, including the due dates for the checks, and debit/credit card payments. Therefore, you should
various information returns. consider the amounts shown on Form 1099-K, Payment Card
and Third Party Network Transactions, along with all other
amounts received, when calculating gross receipts. (See
Understanding Your 1099-K on IRS.gov.)

Lines 3a and 3b
If you received distributions from a cooperative in 2023, you
should receive a Form 1099-PATR. On line 3a, show your total

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distributions from cooperatives. This includes patronage divi-
dends, nonpatronage distributions, per-unit retain allocations, Lines 5a Through 5c
and redemptions of nonqualified written notices of allocation
and per-unit retain certificates. CCC loans. In most cases, you don't report CCC loan pro-
ceeds as income. However, if you pledge part or all of your
Show patronage dividends received in cash and the dollar production to secure a CCC loan, you can elect to report the
amount of qualified written notices of allocation. If you re- loan proceeds as income in the year you receive them. If you
ceived property as patronage dividends, report the FMV of the make this election (or made the election in a prior year), report
property as income. Include cash advances received from a loan proceeds you received in 2023 on line 5a. Attach a state-
marketing cooperative. If you received per-unit retains in cash, ment to your return showing the details of the loan(s). See
show the amount of cash. If you received qualified per-unit re- chapter 3 of Pub. 225.
tain certificates, show the stated dollar amount of the certifi- Forfeited CCC loans. Include the full amount forfeited on
cates. line 5b, even if you reported the loan proceeds as income. This
Don't include as income on line 3b patronage dividends amount may be reported to you on Form 1099-A.
from buying personal or family items, capital assets, or depre- If you didn't elect to report the loan proceeds as income, al-
ciable assets. Enter these amounts on line 3a only. Because you so include the forfeited amount on line 5c.
don't report patronage dividends from these items as income, If you did elect to report the loan proceeds as income, you
you must subtract the amount of the dividend from the cost or generally won't have an entry on line 5c. But if the amount for-
other basis of these items. feited is different from your basis in the commodity, you may
have an entry on line 5c.
Lines 4a and 4b See chapter 3 of Pub. 225 for details on the tax consequen-
Enter on line 4a the total of the government agricultural pro- ces of electing to report CCC loan proceeds as income or for-
gram payments that you received. This includes the following feiting CCC loans.
amounts.
• Price loss coverage payments.
Lines 6a Through 6d
• Agriculture risk coverage payments.
• Coronavirus Food Assistance Program payments. In most cases, you must report crop insurance proceeds in the
Coronavirus Food Assistance Program payments pro- year you receive them. Federal crop disaster payments are trea-
TIP vide direct payments to producers of eligible agricul- ted as crop insurance proceeds. However, if 2023 was the year
tural commodities adversely affected by the COV- of damage, you can elect to include certain proceeds in income
ID-19 outbreak. The program helps offset sales losses and in- for 2024. To make this election, check the box on line 6c and
creased marketing costs associated with the COVID-19 pan- attach a statement to your return. See chapter 3 of Pub. 225 for
demic. Generally, a producer must have suffered a a description of the proceeds for which an election can be made
5%-or-greater price loss over a specified time resulting from and for what you must include in your statement.
the COVID-19 outbreak or face additional significant market- If you elect to defer any eligible crop insurance proceeds,
ing costs for inventories. The payment amount is determined, in you must defer all such crop insurance proceeds (including fed-
part, by the type of commodity produced. eral crop disaster payments) from a single trade or business.
• Market Facilitation Program payments. Enter on line 6a the total crop insurance proceeds you re-
• Market gain from the repayment of a secured Commodity ceived in 2023, even if you elect to include them in income for
Credit Corporation (CCC) loan for less than the original loan 2024.
amount.
• Diversion payments. Enter on line 6b the taxable amount of the proceeds you re-
• Cost-share payments (sight drafts). ceived in 2023. Don't include proceeds you elect to include in
• Payments in the form of materials (such as fertilizer or income for 2024.
lime) or services (such as grading or building dams).
Enter on line 6d the amount, if any, of crop insurance pro-
These amounts are usually reported to you on Form 1099-G. ceeds you received in 2022 and elected to include in income
You may also receive Form CCC-1099-G from the Department for 2023.
of Agriculture showing the amounts and types of payments
made to you. Line 8
On line 4b, report only the taxable amount. For example, Enter on line 8 income not otherwise reportable on lines 1
don't report the market gain shown on Form CCC-1099-G on through 7. This includes the following types of income.
line 4b if you elected to report CCC loan proceeds as income in • Illegal federal irrigation subsidies. See chapter 3 of Pub.
the year received (see Lines 5a Through 5c). No gain results 225.
from redemption of the commodity because you previously re- • Bartering income.
ported the CCC loan proceeds as income. You are treated as re- • Income from cancellation of debt. In most cases, if a debt
purchasing the commodity for the amount of the loan repay- is canceled or forgiven, you must include the canceled amount
ment. However, if you didn't report the CCC loan proceeds un- in income. If a federal agency, financial institution, or credit
der the election, you must report the market gain on line 4b. union canceled or forgave a debt you owed of $600 or more, it

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should send you a Form 1099-C, or similar statement, by Janu- changes, report the profit or loss on Form 6781 instead of this
ary 31, 2024, showing the amount of debt canceled in 2023. line.
However, you may be able to exclude the canceled debt from
income. See Pub. 4681 for details.
• State gasoline or fuel tax refunds you received in 2023.
• Any amount included in income from line 3 of Form Part II. Farm Expenses
6478, Biofuel Producer Credit. Don't deduct the following.
• Any amount included in income from line 10 of Form • Personal or living expenses (such as taxes, insurance, or
8864, Biodiesel, Renewable Diesel, or Sustainable Aviation repairs on your home) that don't produce farm income.
Fuels Credit. • Expenses of raising anything you or your family used that
• The amount of credit for federal tax paid on fuels claimed would not have otherwise been deductible as an expense except
on your 2022 Schedule 3 (Form 1040). For information on in- for the presence of the income-producing farm activity.
cluding the credit in income, see chapter 2 of Pub. 510. • The value of animals you raised that died.
• Any recapture of excess depreciation on any listed prop- • Inventory losses.
erty, including any section 179 expense deduction, if the busi- • Personal losses.
ness use percentage of that property decreased to 50% or less
in 2023. Use Part IV of Form 4797 to figure the recapture. See If you were repaid for any part of an expense during the
the instructions for Schedule C (Form 1040), line 13, for the same year, you must subtract the amount you were repaid from
definition of listed property. the deduction.
• The inclusion amount on leased listed property (other Capitalizing costs to property produced and property ac-
than vehicles) when the business use percentage drops to 50% quired for resale. If you produced real or tangible personal
or less. See chapter 5 of Pub. 946 to figure the amount. property or acquired property for resale, you must generally
• Any recapture of the deduction or credit for clean-fuel ve- capitalize certain expenses to your inventory or other property.
hicle refueling property or alternative fuel vehicle refueling These expenses include the direct costs of the property and any
property used in your farming business. For details on how to indirect costs properly allocable to that property.
figure recapture, see section 30C(e)(5).
• Any income from breeding fees, or fees from renting For tax years beginning after 2017, small business taxpay-
teams, machinery, or land that isn't reported on Schedule E ers, defined later, are not required to capitalize costs under sec-
(Form 1040) or Form 4835. tion 263A. Section 263A generally doesn't apply to the follow-
• The gain or loss on the sale of commodity futures con- ing expenses.
tracts if the contracts were made to protect you from price 1. Producing any plant that has a preproduction period of 2
changes. These are a form of business insurance and are con- years or less.
sidered hedges. If you had a loss in a closed futures contract, 2. Raising animals.
enclose the amount of the loss in parentheses.
3. Replanting certain crops if they were lost or damaged by
• The amount of any payroll tax credit taken by an employ-
reason of freezing temperatures, disease, drought, pests, or
er for qualified paid sick leave and qualified paid family leave
casualty.
under the Families First Coronavirus Response Act (FFCRA)
and the American Rescue Plan Act of 2021 (ARP). See Form Exceptions (1) and (2) don't apply to tax shelters, farming
941, lines 11b, 11d, 13c, and 13e; Form 944, lines 8b, 8d, 10d, syndicates, partnerships, or corporations required to use the ac-
and 10f; or Form 943, lines 12b, 12d, 14d, and 14f. You must crual method of accounting under section 447 or 448(a)(3).
include the full amount (both the refundable and nonrefundable Special rules apply to exception (3) if replanting costs are
portions) of the credit for qualified sick and family leave wages paid or incurred by a taxpayer other than the person described
in gross income for the tax year that includes the last day of in section 263A(d)(2)(A). See sections 263A(d)(2)(B) and (C)
any calendar quarter with respect to which a credit is allowed. for these different rules. Under section 263A(d)(2)(C), there is
a temporary rule for replanting costs of citrus plants that are
Note. A credit is available only if the leave was taken after
paid or incurred after December 22, 2017, and on or before De-
March 31, 2020, and before October 1, 2021, and only after the cember 22, 2027.
qualified leave wages were paid, which might under certain cir-
cumstances not occur until a quarter after September 30, 2021, Small business taxpayer. A small business taxpayer is one
including quarters during 2023. Accordingly, all lines related to that has gross receipts of $29 million or less for the 3 prior tax
qualified sick and family leave wages remain on the employ- years and is not a tax shelter, as defined in section 448(d)(3).
ment tax returns for 2023. See also the inflation adjustment in Rev. Proc. 2021-45 (upda-
ted annually), which increased the threshold for small business
For property acquired and hedging positions estab-
taxpayers from $27 million to $29 million for tax years begin-
! lished, you must clearly identify on your books and re- ning in 2023.
CAUTION cords both the hedging transaction and the item(s) or
aggregate risk being hedged. If you capitalize your expenses, don't reduce your deduc-
tions on lines 10 through 32e by the capitalized expenses. In-
Purchase or sales contracts aren't true hedges if they offset stead, enter the total amount capitalized in parentheses on
losses that already occurred. If you bought or sold commodity line 32f (to indicate a negative amount) and enter “263A” in
futures with the hope of making a profit due to favorable price

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the space to the left of the total. See Preproductive period ex- Whether or not this 50% limit applies, your expenses for
penses, later, for details. livestock feed paid during the year but consumed in a later year
But you may be able to currently deduct rather than capital- may be subject to the rules explained in the line 16 instructions.
ize the expenses of producing a plant with a preproductive peri-
od of more than 2 years. Line 10
Election to deduct certain preproductive period expenses. You can deduct the actual expenses of operating your car or
If the preproductive period of any plant you produce is more truck or take the standard mileage rate. You must use actual ex-
than 2 years, you can elect to currently deduct the expenses penses if you used five or more vehicles simultaneously in your
rather than capitalize them. But you can't make this election for farming business (such as in fleet operations). You can't use ac-
the costs of planting or growing citrus or almond groves incur- tual expenses for a leased vehicle if you previously used the
red before the end of the fourth tax year beginning with the tax standard mileage rate for that vehicle.
year you planted them in their permanent grove. You are trea- You can take the standard mileage rate for 2023 only if you:
ted as having made the election by deducting the preproductive • Owned the vehicle and used the standard mileage rate for
period expenses in the first tax year for which you can make the first year you placed the vehicle in service, or
this election and by applying the special rules, discussed later. • Leased the vehicle and are using the standard mileage
In the case of a partnership or S corporation, the elec- rate for the entire lease period.
! tion must be made by the partner, shareholder, or If you take the standard mileage rate:
CAUTION member. This election can't be made by tax shelters,
• Multiply the business standard mileage rate by 65.5 cents
farming syndicates, partnerships, or corporations required to a mile; and
use the accrual method of accounting under section 447 or Add to this amount your parking fees and tolls, and enter
•
448(a)(3). the total on line 10.
Unless you obtain IRS consent, you must make this election Don't deduct depreciation, rent or lease payments, or your
for the first tax year in which you engage in a farming business actual operating expenses.
involving the production of property subject to the capitaliza-
tion rules. You can't revoke this election without IRS consent. If you deduct actual expenses:
• Include on line 10 the business portion of expenses for
Special rules. If you make the election to deduct prepro- gasoline, oil, repairs, insurance, license plates, etc.; and
ductive expenses for plants: Show depreciation on line 14 and rent or lease payments
•
• Any gain you realize when disposing of the plants is ordi- on line 24a.
nary income up to the amount of the preproductive expenses
you deducted, and If you claim any car or truck expenses (actual or the stand-
• The alternative depreciation rules apply to property ard mileage rate), you must provide the information requested
placed in service in any tax year your election is in effect. on Form 4562, Part V. Be sure to attach Form 4562 to your re-
For details, see Uniform Capitalization Rules in chapter 6 of turn.
Pub. 225. For details, see chapter 4 of Pub. 463.
Prepaid farm supplies. In most cases, if you use the cash
method of accounting and your prepaid farm supplies are more Line 12
than 50% of your other deductible farm expenses, your deduc- Deductible conservation expenses are generally those that are
tion for those supplies may be limited. Prepaid farm supplies paid to conserve soil and water for land used in farming, to pre-
include expenses for feed, seed, fertilizer, and similar farm sup- vent erosion of land used for farming, or for endangered spe-
plies not used or consumed during the year. cies recovery. These expenses include (but aren't limited to)
They also include the cost of poultry that would be allowa- costs for the following.
ble as a deduction in a later tax year if you were to: • The treatment or movement of earth, such as leveling,
grading, conditioning, terracing, contour furrowing, and the re-
1. Capitalize the cost of poultry bought for use in your
storation of soil fertility.
farming business and deduct it ratably over the lesser of 12
months or the useful life of the poultry, and • The construction, control, and protection of diversion
channels, drainage ditches, irrigation ditches, earthen dams,
2. Deduct the cost of poultry bought for resale in the year watercourses, outlets, and ponds.
you sell or otherwise dispose of it. The eradication of brush.
•
If the limit applies, you can deduct prepaid farm supplies • The planting of windbreaks.
that don't exceed 50% of your other deductible farm expenses • The achievement of site-specific management actions
in the year of payment. You can deduct the excess only in the recommended in recovery plans approved pursuant to the En-
year you use or consume the supplies (other than poultry, dangered Species Act of 1973.
which is deductible, as explained above). For details and ex- These expenses can be deducted only if they're consistent
ceptions to these rules, see chapter 4 of Pub. 225. with a conservation plan approved by the Natural Resources
Conservation Service of the Department of Agriculture or a re-
covery plan approved pursuant to the Endangered Species Act

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of 1973 for the area in which your land is located. If no plan on line 23. Examples are accident and health plans, group-term
exists, the expenses must be consistent with a plan of a compa- life insurance, and dependent care assistance programs. If you
rable state agency. You can't deduct the expenses if they were made contributions on your behalf as a self-employed person to
paid or incurred for land used in farming in a foreign country. a dependent care assistance program, complete Form 2441,
Don't deduct expenses you paid or incurred to drain or fill Parts I and III, to figure your deductible contributions to that
wetlands, or to prepare land for center pivot irrigation systems. program.
Your deduction can't exceed 25% of your gross income from Contributions you made on your behalf as a self-employed
farming (excluding certain gains from selling assets such as person to an accident and health plan or for group-term life in-
farm machinery and land). If your conservation expenses are surance aren't deductible on Schedule F (Form 1040). Howev-
more than the limit, the excess can be carried forward and de- er, you may be able to deduct on Schedule 1 (Form 1040),
ducted in later tax years. However, the amount deductible for line 17, the amount you paid for health insurance on behalf of
any 1 year can't exceed the 25% gross income limit for that yourself, your spouse, and your dependent(s) even if you don't
year. itemize your deductions. See the instructions for Schedule 1
(Form 1040), line 17, for details.
For details, see chapter 5 of Pub. 225.
You must reduce your line 15 deduction by the amount of
Line 13 any credit for small employer health insurance premiums deter-
mined on Form 8941. See Form 8941 and its instructions to de-
Enter amounts paid for custom hire or machine work (the ma-
termine which expenses are eligible for the credit.
chine operator furnished the equipment).
Don't include amounts paid for rental or lease of equipment
Line 16
you operated yourself. Instead, report those amounts on
line 24a. If you use the cash method, you can't deduct when paid the cost
of feed your livestock will consume in a later year unless all of
the following apply.
Line 14 The payment was for the purchase of feed rather than a
•
You can deduct depreciation of buildings, improvements, cars deposit.
and trucks, machinery, and other farm equipment of a perma- • The prepayment had a business purpose and wasn't made
nent nature. merely to avoid tax.
Don't deduct depreciation of your home, furniture or other • Deducting the prepayment won't materially distort your
personal items, land, livestock you bought or raised for resale, income.
or other property in your inventory. If all of the above apply, you can deduct the prepaid feed
You can also elect under section 179 to expense a portion of when paid, subject to the overall limit for Prepaid farm sup-
the cost of certain property you bought in 2023 for use in your plies, explained earlier. If all of the above don’t apply, you can
farming business. The section 179 election is made on Form deduct the prepaid feed only in the year it's consumed.
4562.
Special depreciation allowance. For certain trees and vines Line 18
bearing fruits and nuts, planted or grafted after September 27, Don't include the cost of transportation incurred in purchasing
2017, and before January 1, 2027, you may elect to claim the livestock held for resale as freight paid. Instead, add these costs
special depreciation allowance at the time they were planted or to the cost of the livestock.
grafted. Additional property placed in service in 2023 may
qualify for the special depreciation allowance. See the Instruc-
tions for Form 4562 for more information. Line 20
Deduct on this line premiums paid for farm business insurance.
Electing farming business. If you made an election not to
Deduct on line 15 amounts paid for employee accident and
have the business interest expense limitation apply, any proper-
health insurance. Amounts credited to a reserve for self-insur-
ty with a recovery period of 10 years or more held by you must
ance or premiums paid for a policy that pays for your lost earn-
be depreciated under the alternative depreciation system. For
ings due to sickness or disability aren't deductible. For details,
details, see Rev. Proc. 2019-08, available at IRS.gov/irb/
see chapter 4 of Pub. 225.
2019-03_IRB#RP-2019-08 (or its successor).
For information about depreciation and the section 179 de-
duction, see Pub. 946 and chapter 7 of Pub. 225. For details on Lines 21a and 21b
the special depreciation allowance, see chapter 3 of Pub. 946. Interest allocation rules. The tax treatment of interest ex-
pense differs depending on its type. For example, home mort-
See the Instructions for Form 4562 for information on when
gage interest and investment interest are treated differently. In-
you must complete and attach Form 4562.
terest allocation rules require you to allocate (classify) your
interest expense so it's deducted (or capitalized) on the correct
Line 15 line of your return and receives the right tax treatment. These
Deduct contributions to employee benefit programs that aren't rules could affect how much interest you are allowed to deduct
an incidental part of a pension or profit-sharing plan included on Schedule F (Form 1040).

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In most cases, you allocate interest expense by tracing how self-employed person, enter contributions made as an employer
the proceeds of the loan are used. See chapter 4 of Pub. 225 for on your behalf on Schedule 1 (Form 1040), line 16, not on
details. Schedule F (Form 1040).
If you paid interest on a debt secured by your main home In most cases, you must file the applicable form listed next
and any of the proceeds from that debt were used in your farm- if you maintain a pension, profit-sharing, or other funded-de-
ing business, see chapter 4 of Pub. 225 to figure the amount to ferred compensation plan. The filing requirement isn't affected
include on lines 21a and 21b. by whether the plan qualified under the Internal Revenue Code,
How to report. Before entering an amount on line 21a or 21b, or whether you claim a deduction for the current tax year.
see the Instructions for Form 8990 to identify whether you are There is a penalty for failure to timely file these forms. See
required to limit your business interest expense or whether you U.S. Department of Labor.
can elect not to limit your business interest expense. If you are Form 5500-EZ. File this form if you have a one-participant
required to limit your business interest expense, include only retirement plan that meets certain requirements. A one-partici-
the amount you are allowed to deduct on lines 21a and 21b. If pant plan is a plan that covers only you (or you and your
you are not required to limit your business interest expense and spouse).
if you have a mortgage on real property used in your farming Form 5500-SF. File this form electronically with the Depart-
business (other than your main home), enter on line 21a the in- ment of Labor (at efast.dol.gov) if you have a small plan (fewer
terest you paid for 2023 to banks or other financial institutions than 100 participants in most cases) that meets certain require-
for which you received a Form 1098 (or similar statement). If ments.
you didn't receive a Form 1098, enter the interest on line 21b.
Form 5500. File this form electronically with the Department
If you paid more mortgage interest than is shown on Form of Labor (at efast.dol.gov) for a plan that doesn't meet the re-
1098 (or similar statement), see chapter 4 of Pub. 225 to find quirements for filing Form 5500-EZ or 5500-SF.
out if you can deduct the additional interest. If you can, include
the amount on line 21a. Attach a statement to your return ex- For details, see Pub. 560.
plaining the difference and enter “See attached” in the margin
next to line 21a. Lines 24a and 24b
If you and at least one other person (other than your spouse If you rented or leased vehicles, machinery, or equipment, enter
if you file a joint return) were liable for and paid interest on the on line 24a the business portion of your rental cost. But, if you
mortgage and the other person received the Form 1098 (or sim- leased a vehicle for a term of 30 days or more, you may have to
ilar statement), include your share of the interest on line 21b. reduce your deduction by an inclusion amount. See Leasing a
Attach a statement to your return showing the name and ad- Car in chapter 4 of Pub. 463 to figure this amount.
dress of the person who received the Form 1098 (or similar Enter on line 24b amounts paid to rent or lease other proper-
statement). In the margin next to line 21b, enter “See attached.” ty such as pasture or farmland.
Don't deduct interest you prepaid in 2023 for later years; in-
clude only the part that applies to 2023.
Line 25
Enter amounts you paid for repairs and maintenance of farm
Line 22 buildings, machinery, and equipment that are not payments for
Enter the amounts you paid for farm labor. Don't include improvements to the property. Amounts are paid for improve-
amounts paid to yourself. Reduce your deduction by the ments if they are for betterments to your property or restora-
amounts claimed on the following. tions of your property (such as the replacements of major com-
• Form 5884, Work Opportunity Credit. ponents or substantial structural parts), or if they adapt your
• Form 8844, Empowerment Zone Employment Credit. property to a new or different use. See chapter 4 of Pub. 225
• Form 8932, Credit for Employer Differential Wage Pay- for more information.
ments. Don't deduct repairs or maintenance on your home.
• Form 8994, Employer Credit for Paid Family and Medi-
cal Leave. However, you may be able to elect to capitalize and depreci-
ate certain amounts paid for repair and maintenance of tangible
Include the cost of boarding farm labor but not the value of property to the extent you treat these amounts as capital expen-
any products they used from the farm. Include only what you ditures on your books and records regularly used in figuring
paid household help to care for farm laborers. your income and expenses. For details, see chapter 8 of Pub.
225.
If you provided taxable fringe benefits to your employ-
! ees, such as personal use of a car, don't include in
CAUTION farm labor the amounts you depreciated or deducted Line 29
elsewhere. You can deduct the following taxes on this line.
• Real estate and personal property taxes on farm business
assets.
Line 23 Social security and Medicare taxes you paid to match
•
Enter your deduction for contributions to employee pension, what you are required to withhold from farm employees' wa-
profit-sharing, or annuity plans. If the plan included you as a ges.

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Do not reduce your deduction for social security and amortization that begins in 2023, you must complete and attach
! Medicare taxes by the nonrefundable and refundable Form 4562.
CAUTION portions of the FFCRA and ARP credits for qualified
sick and family leave wages claimed on an employment tax re- Business use of your home. You may be able to deduct cer-
turn. Instead, report the credits as income on line 8. tain expenses for business use of your home, subject to limita-
tions. You may also be able to use a simplified method to fig-
• Federal unemployment tax. ure your deduction. Use the appropriate worksheets in Pub. 587
• Federal highway use tax. to figure your allowable deduction. Use the appropriate work-
• Contributions to a state unemployment insurance fund or sheets in Pub. 587 to figure your allowable deduction. Don't
disability benefit fund if they're considered taxes under state use Form 8829.
law.
De minimis safe harbor for tangible property. You may be
Don't deduct the following taxes on this line. able to elect to use a de minimis safe harbor to deduct amounts
• Federal income taxes, including your self-employment paid for certain tangible real or personal property used in your
tax. However, you can deduct one-half of self-employment tax farming business. If you elect the de minimis safe harbor for
on Schedule 1 (Form 1040), line 15. the tax year, enter the total amounts you paid for property qual-
• Estate and gift taxes. ifying under the de minimis safe harbor on line 32. Don’t in-
• Taxes assessed for improvements, such as paving and clude these amounts on any other line. For details, see chap-
sewers. ter 8 of Pub. 334.
• Taxes on your home or personal-use property. You may Energy efficient commercial buildings deduction. You may
be able to deduct on line 32 expenses related to your home or be able to deduct part or all of the expenses of modifying an
principle residence, such as property taxes, if you use your existing commercial building to make it energy efficient. For
home to conduct farming activities. See Business use of your details, see Form 7205 and its instructions.
home, later.
• State and local sales taxes on property purchased for use Forestation and reforestation costs. Reforestation costs are
in your farming business. Instead, treat these taxes as part of generally capital expenditures. However, for each qualified
the cost of the property. timber property, you can elect to expense up to $10,000
• Other taxes not related to your farming business. ($5,000 if married filing separately) of qualifying reforestation
costs paid or incurred in 2023.
Line 30 You can elect to amortize the remaining costs over 84
Enter amounts you paid for gas, electricity, water, and other months. For amortization that begins in 2023, you must com-
utilities for business use on the farm. Don't include personal plete and attach Form 4562.
utilities. You can't deduct the base rate (including taxes) of the The amortization election doesn't apply to trusts, and the ex-
first telephone line into your residence, even if you use it for pense election doesn't apply to estates and trusts. For details on
your farming business. But you can deduct expenses you paid reforestation expenses, see chapters 4 and 7 of Pub. 225.
for your farming business that are more than the cost of the
base rate for the first phone line. For example, if you had a sec- Legal and professional fees. You can include on this line fees
ond phone line, you can deduct the business percentage of the charged by accountants and attorneys that are ordinary and nec-
charges for that line, including the base rate charges. essary expenses directly related to your farming business. In-
clude fees for tax advice and for the preparation of tax forms
related to your farming business. Also, include expenses incur-
Lines 32a Through 32f red in resolving asserted tax deficiencies related to your farm-
Include all ordinary and necessary farm expenses not deducted ing business.
elsewhere on Schedule F (Form 1040), such as advertising, of- Tools. You can deduct the amount you paid for tools that have
fice supplies, etc. Don't include fines or penalties paid to a gov- a short life or cost a small amount, such as shovels and rakes.
ernment for violating any law. For details on business expen-
ses, see chapter 4 of Pub. 225. Travel and meals. In most cases, you can deduct expenses for
farm business travel and 50% of your business meals. See the
At-risk loss deduction. Any loss from this activity that wasn't instructions for Schedule C (Form 1040), lines 24a and 24b.
allowed last year because of the at-risk rules is treated as a de-
duction allocable to this activity in 2023. Entertainment expenses related to your trade or busi-
ness are generally no longer deductible after 2017.
Bad debts. See chapter 8 of Pub. 334. CAUTION!

Business startup costs. If your farming business began in Preproductive period expenses. If you had preproductive pe-
2023, you can elect to deduct up to $5,000 of certain business riod expenses in 2023 that you are capitalizing, enter the total
startup costs. The $5,000 limit is reduced (but not below zero) of these expenses in parentheses on line 32f (to indicate a nega-
by the amount by which your startup costs exceed $50,000. tive amount) and enter “263A” in the space to the left of the to-
Your remaining startup costs can be amortized over a tal.
180-month period, beginning with the month the farming busi-
ness began. For details, see chapters 4 and 7 of Pub. 225. For

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For details, see Capitalizing costs to property produced and Reporting your net profit or loss. Once you have figured
property acquired for resale, earlier, and Uniform Capitaliza- your net profit or loss, report it as follows. You must also con-
tion Rules in chapter 6 of Pub. 225. sider any excess business loss limitation. See Form 461 and its
Excess business loss limitation. Noncorporate taxpayers may instructions for more information.
be subject to excess business loss limitations. The at-risk limits
Individuals. Enter your net profit or loss on line 34 and on
and the passive activity limits are applied before calculating the
Schedule 1 (Form 1040), line 6 and; Schedule SE (Form 1040),
amount of any excess business loss. An excess business loss is
line 1a.
the amount by which the total deductions attributable to all of
your trades or businesses exceed your total gross income and Nonresident aliens. Enter the net profit or loss on line 34
gains attributable to those trades or businesses plus $289,000 and on Schedule 1 (Form 1040), line 6. You should also enter
(or $578,000 in the case of a joint return). A trade or business this amount on Schedule SE (Form 1040), line 1a, if you are
includes, but is not limited to, Schedule F and Schedule C ac- covered under the U.S. social security system due to an interna-
tivities, an activity reported on Form 4835, and other business tional social security agreement currently in effect. See the In-
activities reported on Schedule E. structions for Schedule SE (Form 1040) or SSA.gov/
Business gains and losses reported on Form 4797 and Form international/agreements for information on international so-
8949 are included in the excess business loss calculation. This cial security agreements.
includes farming losses from casualty losses or losses by rea- Partnerships. Enter the net profit or loss on line 34 and on
son of disease or drought. Excess business losses that are disal- Form 1065, line 5. The excess business loss rules are applied at
lowed are treated as an NOL carryover to the following tax the partner level.
year. See Form 461 and its instructions for details.
Trusts and estates. Enter the net profit or loss on line 34
and on Form 1041, line 6.
Line 33
Community income. If you and your spouse had community
If line 32f is a negative amount, subtract it from the total of
income and are filing separate returns, see the Instructions for
lines 10 through 32e. Enter the result on line 33.
Schedule SE (Form 1040) before figuring self-employment tax.
Earned income credit. If you have a net profit on line 34, this
Line 34 amount is earned income and may qualify you for the earned
Figuring your net profit or loss. If line 33 is more than income credit if you meet certain conditions. See the instruc-
line 9, don't enter your loss on line 34 until you have applied tions for Form 1040, line 27, for details.
the at-risk rules and the passive activity loss rules. To apply Conservation Reserve Program (CRP) payments. If you re-
these rules, follow the instructions for line 36 and the Instruc- ceived social security retirement or disability benefits in addi-
tions for Form 8582. After applying these rules, the amount on tion to CRP payments, the CRP payments aren't subject to
line 34 will be your loss, and it may be smaller than the amount self-employment tax. You will deduct these payments from
figured by subtracting line 33 from line 9. You may also be re- your net farm profit or loss on Schedule SE (Form 1040),
quired to file Form 461, which limits the allowable loss. See line 1b. Don't make any adjustment on Schedule F (Form
Form 461 and its instructions for more information. 1040).
If line 9 is more than line 33, and you don't have prior year
unallowed passive activity losses, subtract line 33 from line 9.
Line 35
The result is your net profit.
Reserved for future use.
If line 9 is more than line 33, and you have prior year unal-
lowed passive activity losses, don't enter your net profit on
line 34 until you have figured the amount of prior year unal- Line 36
lowed passive activity losses you may claim this year for this
You don't need to complete line 36 if line 9 is more
activity. Use Form 8582 to figure the amount of prior year un-
TIP than line 33.
allowed passive activity losses you may include on line 34.
Make sure to indicate that you are including prior year passive
activity losses by entering "PAL" to the left of the entry space. At-risk rules. In most cases, if you have a loss from a farming
activity and amounts invested in the activity for which you
If you checked the "No" box on line E, see the Instructions
aren't at risk, you must complete Form 6198 to figure your al-
for Form 8582; you may need to include information from this
lowable loss. The at-risk rules generally limit the amount of
schedule on that form, even if you have a net profit.
loss (including loss on the disposition of assets) you can claim
Partnerships. Subtract line 33 from line 9. If the amount is to the amount you could actually lose in the activity.
a loss, the partners may need to apply the at-risk rules and the Check box 36b if you have amounts invested in this activity
passive activity loss rules to determine the amount of their loss for which you aren't at risk, such as the following.
on line 34. A partner may also be required to file Form 461 to • Nonrecourse loans used to finance the activity, to acquire
limit any excess business loss. See Form 461 and its instruc- property used in the activity, or to acquire the activity that
tions for more information. aren't secured by your own property (other than property used
in the activity). However, there is an exception for certain non-

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recourse financing borrowed by you in connection with holding
real property. Part III. Farm Income—Accrual
• Cash, property, or borrowed amounts used in the activity
(or contributed to the activity, or used to acquire the activity) Method
that are protected against loss by a guarantee, stop-loss agree-
You may be required to use the accrual method of accounting.
ment, or other similar arrangement (excluding casualty insur-
If you use the accrual method, report farm income when it is
ance and insurance against tort liability).
due, paid, earned, or taken into account as revenue in its appli-
• Amounts borrowed for use in the activity from a person
cable financial statement, not when you receive it. In most ca-
who has an interest in the activity, other than as a creditor, or
ses, you must include animals and crops in your inventory if
who is related under section 465(b)(3)(C) to a person (other
you use this method. See Pub. 225 for exceptions, inventory
than you) having such an interest.
methods, how to change methods of accounting, and rules that
Figuring your loss. Before determining your loss on line 34, require certain costs to be capitalized or included in inventory.
you must check box 36a or 36b to determine if your loss from For information about accounting periods, see Pub. 538.
farming is limited by the at-risk rules. Follow the instructions
Chapter 11 bankruptcy. If you were a debtor in a chapter 11
below that apply to your box 36 activity.
bankruptcy case during 2023, see Chapter 11 Bankruptcy Ca-
All investment is at risk. If all your investment amounts are ses in the Instructions for Form 1040 (under Income) and the
at risk in this activity, check box 36a. If you also checked the Instructions for Schedule SE (Form 1040).
“Yes” box on line E, your remaining loss is your loss. The
at-risk rules and the passive activity loss rules don't apply. See Lines 38a Through 40c
Line 34, earlier, for how to report your loss.
See the instructions for lines 3a through 5c, earlier.
But, if you checked the “No” box on line E, you may need
to complete Form 8582 to figure your loss to enter on Line 34.
See the Instructions for Form 8582. Line 43
See Line 8, earlier.
Some investment isn't at risk. If some investment isn't at
risk, check box 36b; the at-risk rules apply to your loss. Be sure Paperwork Reduction Act Notice. We ask for the informa-
to attach Form 6198 to your return. tion on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We
If you also checked the “Yes” box on line E, complete Form
need it to ensure that you are complying with these laws and to
6198 to determine the amount of your loss. The passive activity
allow us to figure and collect the right amount of tax.
loss rules don't apply. See Line 34, earlier, for how to report
your loss. You aren't required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless
But, if you checked the “No” box on line E, the passive ac-
the form displays a valid OMB control number. Books or re-
tivity loss rules may apply. First, complete Form 6198 to figure
cords relating to a form or its instructions must be retained as
the amount of your profit or loss for the at-risk activity, which
long as their contents may become material in the administra-
may include amounts reported on other forms and schedules,
tion of any Internal Revenue law. Generally, tax returns and re-
and the at-risk amount for the activity. Follow the Instructions
turn information are confidential, as required by section 6103.
for Form 6198 to determine how much of your Schedule F
(Form 1040) loss to enter on line 34. After you figure the The time needed to complete and file this form will vary de-
amount of your loss under the at-risk rules, you may need to pending on individual circumstances. The estimated burden for
complete Form 8582 to figure the amount of loss to enter on individual taxpayers filing this form is included in the esti-
line 34. See the Instructions for Form 8582 for details. mates shown in the instructions for their individual income tax
return. The estimated burden for all other taxpayers who file
If you checked box 36b because some investment isn't this form is approved under OMB control number 1545-1975
! at risk and you don't attach Form 6198, the process- and is shown next.
CAUTION ing of your return may be delayed.

At-risk loss deduction. Any loss from this activity not al- Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . 11 hr., 16 min.
lowed for 2023 only because of the at-risk rules is treated as a Learning about the law or the form. . . . . . . . . . . 2 hr., 33 min.
deduction allocable to the activity in 2024. Preparing and sending the form to the IRS. . . . . . 5 hr., 10 min.
More information. For details, see Pub. 925 and the Instruc-
tions for Form 6198. Also, see Form 461 and its instructions. If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we
Note. Form 1040-SS filers skip this line. would be happy to hear from you. See the instructions for the
tax return with which this form is filed.

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