crop insurance proceeds - farm

[ceisenbeis]

The farm press articles have been saying that proceeds from crop insurance contracts that have a revenue assurance component cannot be deferred. A crop insurance salesman informs that 90% of crop insurance contracts are now written that way. Does that mean the option to defer crop insurance proceeds has basically been eliminated? Have you seen anything from the IRS on this issue?

[Bees Knees]

TTB page 5-25 says the following:

Crop insurance and crop disaster payments. Insurance proceeds
(including government disaster payments) received due to
damaged crops are taxable in the year received. This includes payments
for the inability to plant crops because of drought, flood,
or any other natural disaster. The taxpayer can elect to postpone
reporting income until the following year if:

• Cash method of accounting is used,
• Insurance proceeds are received in the same year
the crops were damaged, and
• Under normal business practice the taxpayer would
have included income from the damaged crops in
any tax year following the year the damage occurred.

To elect to postpone income, check the appropriate box
in Part I, Schedule F and attach a statement to the
return with the following information:

• A statement that the taxpayer is postponing
income under Section 451(d).
• Description of the specific crops damaged.
• A statement that under normal conditions income from the
damaged crops would have been included in income in a tax
year following the year the crops were damaged.
• The cause of damage and dates it occurred.
• Total payments received from insurance with an itemization for
each specific crop, and dates payments were received.
• Name of insurance carrier.

This information from TTB is almost word for word from the 2008 version of IRS Pub 225. There is nothing in IRS Pub 225 that says anything about the election cannot be made if the crop insurance contract has a revenue assurance component.

I’m not sure what a revenue assurance component is. I thought that is what all insurance is about…providing you with revenue when something is damaged.