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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Crop Insurance Deferral Update

Nov 13, 2013

David Repp and I are in Mason City, Iowa today for our second presentation of the Day Two of the The ISU Center for Agricultural Law and Taxation Farm and Urban Tax School. Roger McEowen of CALT and Joe Kristan of the Roth CPA firm presented the first day yesterday. Unlike yesterday in Sheldon when it was 4%, this morning it had warmed up to the teens.

A question regarding the deferral of crop insurance proceeds for two crops was brought up in class today. If a farmer keeps completely separate books and records for each crop, then the farmer is allowed to individually elect to defer the crops maintained under the separate books and records. However, almost all farm operations only keep one set of books. This would require the farmer to determine if they normally report more than 50% of sales from all harvested crops in the year after harvest. You would add the gross sales for all crops and if this number is greater than 50% for most if not all years, then any crop insurance proceeds received this year due to yield loss could be deferred.

This election is for all yield crop insurance claims. You cannot pick corn and skip beans, etc. Most claims this year will be corn and not beans. Other crops such as wheat may have a yield claim too. Remember, the portion of the claim related to price cannot be deferred, only the claim related to yield losses.

Remember that if you collect crop insurance proceeds from a 2013 crop loss in 2014 you have effectively deferred your crop insurance proceeds for one year.

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