Overview
Main Menu Name: Farm
This calculation determines the §199A Deduction for farmer-patrons of a specified agricultural or horticultural "cooperative". The calculation involves a series of adjustments that may result in a §199A Deduction that is effectively either greater than or less than the flat 20% available to farmer-patrons of a "non-cooperative" marketing firm. This relates to the so-called "grain-glitch fix" that attempted to level the playing field between cooperatives (deduction originally based on 20% of GROSS farm product sales) and noncooperatives (deduction based on 20% of NET income).
In this article:
Background
Agricultural or Horticultural Cooperative
This screen calculates the §199A Deduction for farmer-patrons of a specified agricultural or horticultural "cooperative". The calculation involves a series of adjustments that may result in a §199A Deduction that is effectively either greater than or less than the flat 20% available to farmer-patrons of a "non-cooperative" marketing firm.
Grain-Glitch Fix
This relates to the so-called "grain-glitch fix" that attempted to level the playing field between cooperatives (deduction originally based on 20% of GROSS farm product sales) and noncooperatives (deduction based on 20% of NET income).
Getting Started
Entering Data
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Tax Year: Enter the year for which the federal income tax is being calculated. The program handles from year 2018 onwards. For future years, the program will default to the current year.
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Domestic Production Gross Receipts (DPGR): The gross receipts of the taxpayer which are derived from any lease, rental, license, sale, exchange or other disposition of any agricultural or horticultural product which was manufactured, produced, grown, or extracted by the taxpayer in whole or significant part within the United States. Such term shall not include gross receipts of the taxpayer which are derived from the lease, rental, license, sale, exchange, or other disposition of land.
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DPGR Cost of Goods Sold: Enter the cost of goods sold.
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DPGR Expenses/Losses/Deductions: Enter the losses or expenses.
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W-2 Wages Paid: Enter the amount of W-2 Wages paid to employees of the business. Include W-2 Wages paid to shareholder- employees of an S corporation. Do not include guaranteed payments to partners of a partnership. Sole proprietors are not paid W-2 Wages from their own sole proprietorship. W-2 Wages refers to the amounts described in paragraphs(3) and (8) of §6051(a) which are paid by a person with respect to employment of employees by the person during the calendar year ending during that taxable year. §6051(a) is "the total amount of wages as defined in §3401(a) " and §6051(a)(8) is "the total of amount of elective deferrals. §3401(a) provides that generally "wages" means all remuneration for services performed by an employee for his employer.
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Taxable Income: Income computed without regard to any deduction allowable under subsection (b) or (c) of §1382 (relating to patronage dividends, per-unit retain allocations, and nonpatronage distributions).
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Qualified Production Activities Income: This represents the DPGR less the cost of goods sold, less the expenses/losses/deductions.
- Oil Related Income: for any taxable year, the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof, during the taxable year.
Results
Agricultural or Horticultural Cooperative
This screen calculates the §199A Deduction for farmer-patrons of a specified agricultural or horticultural "cooperative". The calculation involves a series of adjustments that may result in a §199A Deduction that is effectively either greater than or less than the flat 20% available to farmer-patrons of a "non-cooperative" marketing firm.
Grain-Glitch Fix
This relates to the so-called "grain-glitch fix" that attempted to level the playing field between cooperatives (deduction originally based on 20% of GROSS farm product sales) and noncooperatives (deduction based on 20% of NET income).
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