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Farm Income - Accounting Method

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Farm Income - Accounting Method


Farm Income - Cash method:  Complete Schedule F, Parts I and II. 

If you use the cash method, show all items of taxable income actually or constructively received during the year (in cash, property, or services).  Income is constructively received when it is credited to your account or set aside for you to use.  Also, show amounts actually paid during the year for deductible expenses.  However, if the payment of an expenditure creates an asset having a useful life that extends substantially beyond the close of the year, it may not be deductible or may be deductible only in part for the year of the payment.

Farm Income - Accrual method:  Complete Schedule F, Parts II, III, and Part I, line 11.

If you use an accrual method, report income when you earn it and deduct expenses when you incur them even if you do not pay them during the tax year.  Accrual-basis taxpayers are put on a cash basis for deducting business expenses owed to a related cash-basis taxpayer.

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Views: 1266 Created on: Jun 15, 2013
Date updated: Dec 04, 2020

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