Amended 1986, 1988, 1997, 2014, 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(118), inserted “expenses” after “farming” in section catchline.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec. (f) as (d).
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(C)(i), struck out subsec. (g). Text read as follows: “Except as provided in subsection (f), subsections (a) and (b) shall not apply to any taxable year beginning after December 31, 1986.”
- 1997 Pub. L. 105-34 Pub. L. 105–34 substituted “section 121” for “section 1034”.
- 1988 Pub. L. 100-647 Pub. L. 100–647 added subsec. (g).
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 404(b)(1), substituted “for certain farming” for “in case of farming syndicates” in section catchline.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 404(a), added subsec. (f).
Cases: Estate of Wallace v. Commissioner, 965 F.2d 1038 (11th Cir. 1992); Burnett Ranches, Ltd. v. United States, 753 F.3d 143 (5th Cir. 2014); Golden Rod Farms, Inc. v. United States, 115 F.3d 897 (11th Cir. 1997)
(a) General rule In the case of any taxpayer to whom subsection (d) applies, a deduction (otherwise allowable under this chapter) for amounts paid for feed, seed, fertilizer, or other similar farm supplies shall only be allowed for the taxable year in which such feed, seed, fertilizer, or other supplies are actually used or consumed, or, if later, for the taxable year for which allowable as a deduction (determined without regard to this section).
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(A), substituted “any taxpayer to whom subsection (d) applies” for “any farming syndicate (as defined in subsection (c))” in subsec. (a) and in introductory provisions of subsec. (b).
Cited by 2
(b) Certain poultry expenses In the case of any taxpayer to whom subsection (d) applies—
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(A), substituted “any taxpayer to whom subsection (d) applies” for “any farming syndicate (as defined in subsection (c))” in subsec. (a) and in introductory provisions of subsec. (b).
Cited by 1
(1) the cost of poultry (including egg-laying hens and baby chicks) purchased for use in a trade or business (or both for use in a trade or business and for sale) shall be capitalized and deducted ratably over the lesser of 12 months or their useful life in the trade or business, and
(2) the cost of poultry purchased for sale shall be deducted for the taxable year in which the poultry is sold or otherwise disposed of.
(c) Exception Subsection (a) shall not apply to any amount paid for supplies which are on hand at the close of the taxable year on account of fire, storm, or other casualty, or on account of disease or drought.
Amended 1978, 1982, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec. (d) as (c). Former subsec. (c) transferred to section 461 of this title.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(B)(i), transferred subsec. (c) defining the term “farming syndicate” to section 461 of this title and redesignated it as subsec. (j) of that section.
- 1982 Pub. L. 97-354 Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”.
- 1978 Pub. L. 95-600 Pub. L. 95–600 substituted in subpar. (E) “(or a spouse of any such member)” for “(within the meaning of section 267(c)(4))” and provided that for purposes of subpar. (E) the term “family” has the meaning given to such term by section 267(c)(4).
Cited by 1
(d) Certain persons prepaying 50 percent or more of certain farming expenses
Amended 1986, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(D), struck out “Subsections (a) and (b) to apply to” before “Certain persons” in heading, redesignated pars. (2) to (4) as (1) to (3), respectively, and struck out former par. (1). Prior to amendment, text of par. (1) read as follows: “In the case of a taxpayer to whom this subsection applies, subsections (a) and (b) shall apply to the excess prepaid farm supplies of such taxpayer in the same manner as if such taxpayer were a farming syndicate.”
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec. (f) as (d). Former subsec. (d) redesignated (c).
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 803(b)(8), substituted “Exception” for “Exceptions” as heading and amended text generally. Prior to amendment, text read as follows: “Subsection (a) shall not apply to—
“(1) any amount paid for supplies which are on hand at the close of the taxable year on account of fire, storm, flood, or other casualty or on account of disease or drought, or
“(2) any amount required to be charged to capital account under section 278.”
Cited by 2
(1) Taxpayer to whom subsection applies This subsection applies to any taxpayer for any taxable year if such taxpayer—
(A) does not use an accrual method of accounting,
(B) has excess prepaid farm supplies for the taxable year, and
(C) is not a qualified farm-related taxpayer.
(2) Qualified farm-related taxpayer
(A) In general For purposes of this subsection, the term “qualified farm-related taxpayer” means any farm-related taxpayer if—
(I) the aggregate prepaid farm supplies for the 3 taxable years preceding the taxable year are less than 50 percent of,
(II) the aggregate deductible farming expenses (other than prepaid farm supplies) for such 3 taxable years, or
(ii) the taxpayer has excess prepaid farm supplies for the taxable year by reason of any change in business operation directly attributable to extraordinary circumstances.
(B) Farm-related taxpayer For purposes of this paragraph, the term “farm-related taxpayer” means any taxpayer—
(i) whose principal residence (within the meaning of section 121) is on a farm,
Cited by 1
(iii) who is a member of the family (within the meaning of section 461(k)(2)(E)) of a taxpayer described in clause (i) or (ii).
Amended 2018
- 2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(119), substituted “section 461(k)(2)(E)” for “subsection (c)(2)(E)”.
(3) Definitions For purposes of this subsection—
(A) Excess prepaid farm supplies The term “excess prepaid farm supplies” means the prepaid farm supplies for the taxable year to the extent the amount of such supplies exceeds 50 percent of the deductible farming expenses for the taxable year (other than prepaid farm supplies).
(B) Prepaid farm supplies The term “prepaid farm supplies” means any amounts which are described in subsection (a) or (b) and would be allowable for a subsequent taxable year under the rules of subsections (a) and (b).
(e) Farming For purposes of this section, the term “farming” means the cultivation of land or the raising or harvesting of any agricultural or horticultural commodity including the raising, shearing, feeding, caring for, training, and management of animals. For purposes of the preceding sentence, trees (other than trees bearing fruit or nuts) shall not be treated as an agricultural or horticultural commodity.
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(58)(C), added subsec. (e) and struck out former subsec. (e) which defined the terms “farming” and “limited entrepreneur” for purposes of this section.