2/3 Gross Income Test for Farmers

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  • Art
    Senior Member
    • Jan 2006
    • 178
    #1

    2/3 Gross Income Test for Farmers

    In 2016 farmer is selling out his farm equipment and will be cash or crop sharing his land. He will have about $150,000 net Sch F income from grain carried over from last year and about $400,000 from equipment sales. Do the gross proceeds from the sale qualify as "gross income from farming"? I could not find it listed under the Special Rules for Farmers and Fishermen. If it does not, then I believe he will need to make estimated tax payments in 2016 to avoid substantial underpayment penalty. Anyone have experience on this?

    Art
    Tags: None
    • Jiggers
      Senior Member
      • Sep 2005
      • 1973
      #2
      IRS Pub 225 says that Gross Income from Farming doesn't include "Gains you receive from the sale of farm land and depreciable farm equipment". Page 85, top of 3rd column.
      Jiggers, EA

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        • Art
          Senior Member
          • Jan 2006
          • 178
          #3
          Thanks Jiggers.

          Art

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