It is clarity, but likely for many farmers not what they wanted to see. If you show a loss on line 34 of Schedule F you do not qualify for any loan based on your earnings. You would qualify for a loan for any employee payroll costs.
If you are a farm partnership, it is a little more complicated. First, you are allowed all of your employee payroll costs. You then get to add in all of the partner's self-employment income calculated as follows:
- Total SE income reported on line 14a of Schedule K/K-1, reduced by:
- Any Section 179 expense deduction claimed, unreimbursed partnership expenses claimed and depletion claimed on oil and gas properties (likely does not apply to most farmers);
- Then multiplied by 92.35% to arrive at net SE earnings.
If this amount is over $100,000, then reduce to $100,000. Multiplying by 92.35% for Schedule F farmers appears not to be required but may be required in a future announcement since the same calculations usually apply to Schedule C and Schedule F filers on Schedule SE.
Many farm partnerships have a manager managed LLC structure that allows for a reduction in self-employment tax. Even though this income is considered to be ordinary income, it appears that none of that income will qualify for PPP loans.