By Brian E. Ravencraft, CPA, CGMA, Partner at Holbrook & Manter, CPAs
As I have stated in other articles, weather here in Ohio can be quite fickle and the 2019 planting has taken the cake. While certain areas may still flourish, other areas will have poor (or no) production or be deemed disaster areas. Those not so lucky may be receiving crop insurance proceeds later in 2019. If you believe you may receive crop insurance proceeds this year , before you file your tax return, you might want to consider the following.
Deferral of certain crop insurance and disaster income proceeds
Typically, most farmers are cash basis taxpayers and proceeds from the destruction or damage of crops is included in income in the year of receipt; however, federal law allows certain insurance proceeds to be deferred one year, if certain requirement are met.
Under a special provision, a farmer may elect to include crop insurance and disaster in income in the taxable year after the year of the crop loss if it’s the farmer’s practice to report income from the sale of the crop in a later year.… Continue reading