skip navigation

Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

Forms
Publications

Comments
About Tax Map

IRS.gov Website
Instructions for Schedule F (Form 1040)
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1213

Part II. Farm Expenses(p5)

For Use in Tax Year 2013
rule
Do not deduct the following.
If you were repaid for any part of an expense, you must subtract the amount you were repaid from the deduction.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1262
Capitalizing costs of property.(p5)
For Use in Tax Year 2013
rule
If you produced real or tangible personal property or acquired property for resale, certain expenses must be included in inventory costs or capitalized. These expenses include the direct costs of the property and the share of any indirect costs allocable to that property. However, these rules generally do not apply to expenses of:
  1. Producing any plant that has a preproductive period of 2 years or less,
  2. Raising animals, or
  3. Replanting certain crops if they were lost or damaged by reason of freezing temperatures, disease, drought, pests, or casualty.
caution
Exceptions (1) and (2) do not apply to tax shelters, farming syndicates, partnerships, or corporations required to use the accrual method of accounting under section 447 or 448(a)(3).
If you capitalize your expenses, do not reduce your deductions on lines 10 through 32e by the capitalized expenses. Instead, enter the total amount capitalized in parentheses on line 32f (to indicate a negative amount) and enter 263A in the space to the left of the total. See Preproductive period expenses, later, for details.
But you may be able to currently deduct rather than capitalize the expenses of producing a plant with a preproductive period of more than 2 years. See Election to deduct certain preproductive period expenses, next.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1333
Election to deduct certain preproductive period expenses.(p5)
For Use in Tax Year 2013
rule
If the preproductive period of any plant you produce is more than 2 years, you can elect to currently deduct the expenses rather than capitalize them. But you cannot make this election for the costs of planting or growing citrus or almond groves incurred before the end of the fourth tax year beginning with the tax year you planted them in their permanent grove. You are treated as having made the election by deducting the preproductive period expenses in the first tax year for which you can make this election and by applying the special rules, discussed later.
caution
In the case of a partnership or S corporation, the election must be made by the partner, shareholder, or member. This election cannot be made by tax shelters, farming syndicates, partnerships, or corporations required to use the accrual method of accounting under section 447 or 448(a)(3).
Unless you obtain IRS consent, you must make this election for the first tax year in which you engage in a farming business involving the production of property subject to the capitalization rules. You cannot revoke this election without IRS consent.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1369
Special rules.(p6)
If you make the election to deduct preproductive expenses for plants:
For details, see Uniform Capitalization Rules in chapter 6 of Pub. 225.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1399
Prepaid farm supplies.(p6)
For Use in Tax Year 2013
rule
In most cases, if you use the cash method of accounting and your prepaid farm supplies are more than 50% of your other deductible farm expenses, your deduction for those supplies may be limited. Prepaid farm supplies include expenses for feed, seed, fertilizer, and similar farm supplies not used or consumed during the year.
They also include the cost of poultry that would be allowable as a deduction in a later tax year if you were to:
  1. Capitalize the cost of poultry bought for use in your farming business and deduct it ratably over the lesser of 12 months or the useful life of the poultry, and
  2. Deduct the cost of poultry bought for resale in the year you sell or otherwise dispose of it.
If the limit applies, you can deduct prepaid farm supplies that do not exceed 50% of your other deductible farm expenses in the year of payment. You can deduct the excess only in the year you use or consume the supplies (other than poultry, which is deductible as explained above). For details and exceptions to these rules, see chapter 4 of Pub. 225.
Whether or not this 50% limit applies, your expenses for livestock feed paid during the year but consumed in a later year may be subject to the rules explained in the line 16 instructions.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1451

Line 10(p6)

For Use in Tax Year 2013
rule
You can deduct the actual expenses of operating your car or truck or take the standard mileage rate. You must use actual expenses if you used five or more vehicles simultaneously in your farming business (such as in fleet operations). You cannot use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle.
You can take the standard mileage rate for 2013 only if you:
If you take the standard mileage rate:
Do not deduct depreciation, rent or lease payments, or your actual operating expenses.
If you deduct actual expenses:
If you claim any car or truck expenses (actual or the standard mileage rate), you must provide the information requested on Form 4562, Part V. Be sure to attach Form 4562 to your return.
For details, see chapter 4 of Pub. 463.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1541

Line 12(p6)

For Use in Tax Year 2013
rule
Deductible conservation expenses generally are those that are paid to conserve soil and water for land used in farming, to prevent erosion of land used for farming, or for endangered species recovery. These expenses include (but are not limited to) costs for the following.
These expenses can be deducted only if they are consistent with a conservation plan approved by the Natural Resources Conservation Service of the Department of Agriculture or a recovery plan approved pursuant to the Endangered Species Act of 1973, for the area in which your land is located. If no plan exists, the expenses must be consistent with a plan of a comparable state agency. You cannot deduct the expenses if they were paid or incurred for land used in farming in a foreign country.
Do not deduct expenses you paid or incurred to drain or fill wetlands, or to prepare land for center pivot irrigation systems.
Your deduction cannot exceed 25% of your gross income from farming (excluding certain gains from selling assets such as farm machinery and land). If your conservation expenses are more than the limit, the excess can be carried forward and deducted in later tax years. However, the amount deductible for any one year cannot exceed the 25% gross income limit for that year.
For details, see chapter 5 of Pub. 225.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1608

Line 13(p6)

For Use in Tax Year 2013
rule
Enter amounts paid for custom hire or machine work (the machine operator furnished the equipment).
Do not include amounts paid for rental or lease of equipment you operated yourself. Instead, report those amounts on line 24a.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1633

Line 14(p7)

For Use in Tax Year 2013
rule
You can deduct depreciation of buildings, improvements, cars and trucks, machinery, and other farm equipment of a permanent nature.
Do not deduct depreciation on your home, furniture or other personal items, land, livestock you bought or raised for resale, or other property in your inventory.
You can also elect under section 179 to expense a portion of the cost of certain property you bought in 2013 for use in your farming business. The section 179 election is made on Form 4562.
For information about depreciation and the section 179 deduction, see Pub. 946 and chapter 7 of Pub. 225. For details on the special depreciation allowance, see chapter 3 of Pub. 946.
See the Instructions for Form 4562 for information on when you must complete and attach Form 4562.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1671

Line 15(p7)

For Use in Tax Year 2013
rule
Deduct contributions to employee benefit programs that are not an incidental part of a pension or profit-sharing plan included on line 23. Examples are accident and health plans, group-term life insurance, and dependent care assistance programs. If you made contributions on your behalf as a self-employed person to a dependent care assistance program, complete Form 2441, Parts I and III, to figure your deductible contributions to that program.
Contributions you made on your behalf as a self-employed person to an accident and health plan or for group-term life insurance are not deductible on Schedule F (Form 1040). However, you may be able to deduct on Form 1040, line 29 (or on Form 1040NR, line 29), the amount you paid for health insurance on behalf of yourself, your spouse, and dependent(s) even if you do not itemize your deductions. See the instructions for Form 1040, line 29, or Form 1040NR, line 29, for details.
You must reduce your line 15 deduction by the amount of any credit for small employer health insurance premiums determined on Form 8941. See Form 8941 and its instructions to determine which expenses are eligible for the credit.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1704

Line 16(p7)

For Use in Tax Year 2013
rule
If you use the cash method, you cannot deduct when paid the cost of feed your livestock will consume in a later year unless all of the following apply.
If all of the above apply, you can deduct the prepaid feed when paid, subject to the overall limit for Prepaid farm supplies explained earlier. If all of the above do not apply, you can deduct the prepaid feed only in the year it is consumed.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1738

Line 18(p7)

For Use in Tax Year 2013
rule
Do not include the cost of transportation incurred in purchasing livestock held for resale as freight paid. Instead, add these costs to the cost of the livestock.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1750

Line 20(p7)

For Use in Tax Year 2013
rule
Deduct on this line premiums paid for farm business insurance. Deduct on line 15 amounts paid for employee accident and health insurance. Amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability are not deductible. For details, see chapter 6 of Pub. 535.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1772

Lines 21a and 21b(p7)

For Use in Tax Year 2013
rule
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1787
Interest allocation rules.(p7)
For Use in Tax Year 2013
rule
The tax treatment of interest expense differs depending on its type. For example, home mortgage interest and investment interest are treated differently. Interest allocation rules require you to allocate (classify) your interest expense so it is deducted (or capitalized) on the correct line of your return and receives the right tax treatment. These rules could affect how much interest you are allowed to deduct on Schedule F (Form 1040).
In most cases, you allocate interest expense by tracing how the proceeds of the loan are used. See chapter 4 of Pub. 535 for details.
If you paid interest on a debt secured by your main home and any of the proceeds from that debt were used in your farming business, see chapter 4 of Pub. 535 to figure the amount to include on lines 21a and 21b.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1814
How to report.(p7)
For Use in Tax Year 2013
rule
If you have a mortgage on real property used in your farming business (other than your main home), enter on line 21a the interest you paid for 2013 to banks or other financial institutions for which you received a Form 1098 (or similar statement). If you did not receive a Form 1098, enter the interest on line 21b.
If you paid more mortgage interest than is shown on Form 1098, see chapter 4 of Pub. 535 to find out if you can deduct the additional interest. If you can, include the amount on line 21a. Attach a statement to your return explaining the difference and enter See attached in the margin next to line 21a.
If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on the mortgage and the other person received the Form 1098, include your share of the interest on line 21b. Attach a statement to your return showing the name and address of the person who received the Form 1098. In the margin next to line 21b, enter See attached.
Do not deduct interest you prepaid in 2013 for later years; include only the part that applies to 2013.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1870

Line 22(p8)

For Use in Tax Year 2013
rule
Enter the amounts you paid for farm labor. Do not include amounts paid to yourself. Reduce your deduction by the amounts claimed on:
Include the cost of boarding farm labor but not the value of any products they used from the farm. Include only what you paid household help to care for farm laborers.
caution
If you provided taxable fringe benefits to your employees, such as personal use of a car, do not include in farm labor the amounts you depreciated or deducted elsewhere.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1926

Line 23(p8)

For Use in Tax Year 2013
rule
Enter your deduction for contributions to employee pension, profit-sharing, or annuity plans. If the plan included you as a self-employed person, enter contributions made as an employer on your behalf on Form 1040, line 28 (or on Form 1040NR, line 28), not on Schedule F (Form 1040).
In most cases, you must file the applicable form listed next if you maintain a pension, profit-sharing, or other funded-deferred compensation plan. The filing requirement is not affected by whether or not the plan qualified under the Internal Revenue Code, or whether or not you claim a deduction for the current tax year. There is a penalty for failure to timely file these forms.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1940
Form 5500-EZ.(p8)
For Use in Tax Year 2013
rule
File this form if you have a one-participant retirement plan that meets certain requirements. A one-participant plan is a plan that covers only you (or you and your spouse).
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1949
Form 5500-SF.(p8)
For Use in Tax Year 2013
rule
File this form electronically with the Department of Labor (at www.efast.dol.gov) if you have a small plan (fewer than 100 participants in most cases) that meets certain requirements.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1959
Form 5500.(p8)
For Use in Tax Year 2013
rule
File this form electronically with the Department of Labor (at www.efast.dol.gov) for a plan that does not meet the requirements for filing Form 5500-EZ or Form 5500-SF.
For details, see Pub. 560.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e1975

Lines 24a and 24b(p8)

For Use in Tax Year 2013
rule
If you rented or leased vehicles, machinery, or equipment, enter on line 24a the business portion of your rental cost. But if you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction by an inclusion amount. See Leasing a Car in chapter 4 of Pub. 463 to figure this amount.
Enter on line 24b amounts paid to rent or lease other property such as pasture or farmland.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2004

Line 25(p8)

For Use in Tax Year 2013
rule
Enter amounts you paid for incidental repairs and maintenance of farm buildings, machinery, and equipment that do not add to the property's value or appreciably prolong its life.
Do not deduct repairs or maintenance on your home.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2028

Line 29(p8)

For Use in Tax Year 2013
rule
You can deduct the following taxes on this line.
Do not deduct the following taxes on this line.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2111

Line 30(p8)

For Use in Tax Year 2013
rule
Enter amounts you paid for gas, electricity, water, and other utilities for business use on the farm. Do not include personal utilities. You cannot deduct the base rate (including taxes) of the first telephone line into your residence, even if you use it for your farming business. But you can deduct expenses you paid for your farming business that are more than the cost of the base rate for the first phone line. For example, if you had a second phone line, you can deduct the business percentage of the charges for that line, including the base rate charges.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2130

Lines 32a Through 32f(p8)

For Use in Tax Year 2013
rule
Include all ordinary and necessary farm expenses not deducted elsewhere on Schedule F (Form 1040), such as advertising, office supplies, etc. Do not include fines or penalties paid to a government for violating any law.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2139
At-risk loss deduction.(p8)
For Use in Tax Year 2013
rule
Any loss from this activity that was not allowed last year because of the at-risk rules is treated as a deduction allocable to this activity in 2013.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2161
Bad debts.(p8)
For Use in Tax Year 2013
rule
See chapter 10 of Pub. 535.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2178
Business start-up costs.(p8)
For Use in Tax Year 2013
rule
If your farming business began in 2013, you can elect to deduct up to $5,000 of certain business start-up costs. The $5,000 limit is reduced (but not below zero) by the amount by which your start-up costs exceed $50,000. Your remaining start-up costs can be amortized over a 180-month period, beginning with the month the farming business began. For details, see chapters 4 and 7 of Pub. 225. For amortization that begins in 2013, you must complete and attach Form 4562.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2205
Business use of your home.(p9)
For Use in Tax Year 2013
rule
You may be able to deduct certain expenses for business use of your home, subject to limitations. You may also be able to use a simplified method to figure your deduction. Use the appropriate worksheets in Pub. 587 to figure your allowable deduction. Do not use Form 8829.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2224
Excess farm loss deduction.(p9)
For Use in Tax Year 2013
rule
Any loss from this activity that was not allowed last year because of the excess farm loss rules is treated as a deduction allocable to this activity in 2013.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2241
Forestation and reforestation costs.(p9)
For Use in Tax Year 2013
rule
Reforestation costs are generally capital expenditures. However, for each qualified timber property, you can elect to expense up to $10,000 ($5,000 if married filing separately) of qualifying reforestation costs paid or incurred in 2013.
You can elect to amortize the remaining costs over 84 months. For amortization that begins in 2013, you must complete and attach Form 4562.
The amortization election does not apply to trusts, and the expense election does not apply to estates and trusts. For details on reforestation expenses, see chapters 4 and 7 of Pub. 225.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2268
Legal and professional fees.(p9)
For Use in Tax Year 2013
rule
You can include on this line fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to your farming business. Include fees for tax advice and for the preparation of tax forms related to your farming business. Also include expenses incurred in resolving asserted tax deficiencies related to your farming business.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2283
Tools.(p9)
For Use in Tax Year 2013
rule
You can deduct the amount you paid for tools that have a short life or cost a small amount, such as shovels and rakes.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2292
Travel, meals, and entertainment.(p9)
For Use in Tax Year 2013
rule
In most cases, you can deduct expenses for farm business travel and 50% of your business meals and entertainment. But there are exceptions and limitations. See the instructions for Schedule C (Form 1040), lines 24a and 24b.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2323
Preproductive period expenses.(p9)
For Use in Tax Year 2013
rule
If you had preproductive period expenses in 2013 that you are capitalizing, enter the total of these expenses in parentheses on line 32f (to indicate a negative amount) and enter 263A in the space to the left of the total.
For details, see Capitalizing costs of property, earlier, and Uniform Capitalization Rules in chapter 6 of Pub. 225.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2357

Line 33(p9)

For Use in Tax Year 2013
rule
If line 32f is a negative amount, subtract it from the total of lines 10 through 32e. Enter the result on line 33.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2366

Line 34(p9)

For Use in Tax Year 2013
rule
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2376
Figuring your net profit or allowable loss.(p9)
For Use in Tax Year 2013
rule
If line 33 is more than line 9, do not enter your loss on line 34 until you have applied the excess farm loss rules, the at-risk rules, and the passive activity loss rules. To apply these rules, follow the instructions for lines 35 and 36, and the Instructions for Form 8582. After applying these rules, the amount on line 34 will be your allowable loss, and it may be smaller than the amount figured by subtracting line 33 from line 9.
If line 9 is more than line 33, and you do not have prior year unallowed passive activity losses, subtract line 33 from line 9. The result is your net profit.
If line 9 is more than line 33, and you have prior year unallowed passive activity losses, do not enter your net profit on line 34 until you have figured the amount of prior year unallowed passive activity losses you may claim this year for this activity. Use Form 8582 to figure the amount of prior year unallowed passive activity losses you may include on line 34. Make sure to indicate that you are including prior year passive activity losses by entering "PAL" to the left of the entry space.
If you checked the "No" box on line E, see the Instructions for Form 8582; you may need to include information from this schedule on that form, even if you have a net profit.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2398
Partnerships.(p9)
Subtract line 33 from line 9. If the amount is a loss, the partners may need to apply the excess farm loss rules, the at-risk rules, and the passive activity loss rules to determine the amount of their allowable loss.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2406
Reporting your net profit or allowable loss.(p9)
For Use in Tax Year 2013
rule
Once you have figured your net profit or allowable loss, report it as follows.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2415
Individuals.(p9)
Enter your net profit or allowable loss on line 34 and on Form 1040, line 18, and Schedule SE (Form 1040), line 1a.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2423
Nonresident aliens.(p9)
Enter the net profit or allowable loss on line 34 and on Form 1040NR, line 19. You should also enter this amount on Schedule SE (Form 1040), line 1a if you are covered under the U.S. social security system due to an international social security agreement currently in effect. See the Instructions for Schedule SE (Form 1040) for information on international social security agreements.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2436
Partnerships. (p9)
Enter the net profit or loss on line 34 and on Form 1065, line 5 (or Form 1065-B, line 7). Because the excess farm loss rules are applied at the partner level, the partnership will notify each partner on the Schedule K-1 if the partnership received one of the subsidies discussed later. Each partner should complete one of the excess farm loss worksheets to determine if there is an excess farm loss.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2447
Trusts and estates. (p9)
Enter the net profit or allowable loss on line 34 and on Form 1041, line 6.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2457
Community income.(p9)
For Use in Tax Year 2013
rule
If you and your spouse had community income and are filing separate returns, see the Instructions for Schedule SE (Form 1040) before figuring self-employment tax.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2465
Earned income credit.(p9)
For Use in Tax Year 2013
rule
If you have a net profit on line 34, this amount is earned income and may qualify you for the earned income credit if you meet certain conditions. See the instructions for Form 1040, lines 64a and 64b, for details.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2478
Conservation Reserve Program (CRP) payments.(p10)
For Use in Tax Year 2013
rule
If you received social security retirement or disability benefits in addition to CRP payments, the CRP payments are not subject to self-employment tax. You will deduct these payments from your net farm profit or loss on Schedule SE (Form 1040), line 1b. Do not make any adjustment on Schedule F (Form 1040).
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2488

Line 35(p10)

For Use in Tax Year 2013
rule
Answer line 35 with respect to your farming business (defined later), and not just for the farming activities reported on this Schedule F. You may also have reported farming activities on another Schedule F or on Form 4835.
Check the Yes box if you received one of the following subsidies in 2013.You are considered to have received one of these subsidies in 2013 if you are a partner or shareholder in a partnership or S corporation that received one of these subsidies during 2013. Check the "No" box if you did not receive one of these subsidies in 2013.
If you checked the Yes box, your farm loss may be reduced. You must apply the excess farm loss rules, discussed next.
taxtip
If you checked the "No" box, you do not have excess farm loss.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2535
Excess farm loss rules.(p10)
For Use in Tax Year 2013
rule
If you received one of the subsidies listed above, part of your loss may be excess farm loss. Excess farm loss is not an allowable loss. Instead, excess farm loss is carried forward to the next year and treated as a deduction.
Your excess farm loss for a year is the amount by which your total deductions from your farming businesses exceed your total gross income or gain from your farming businesses, plus a threshold amount. The threshold amount is the greater of $300,000 ($150,000 if your filing status is married filing separately) or your total net profit or loss from farming businesses for the last five years (2008-2012), including for each of those years any net gain from the sale of property used in your farming businesses.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2547
Farming business defined. (p10)
A farming business generally is the trade or business of farming, including operating a nursery or sod farm or raising or harvesting of trees bearing fruit, nuts, or other crops, or ornamental trees, such as evergreen trees, if they are cut within the first 6 years.
For purposes of calculating your excess farm loss for the year, a farm business also includes the following.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2573
Figuring your excess farm loss.(p10)
For Use in Tax Year 2013
rule
To figure your excess farm loss, you can use one of the excess farm loss worksheets, later. You may need to adjust your income or deductions before figuring your excess farm loss.
If you file multiple copies of Schedule F (Form 1040), Schedule C (Form 1040), or Schedule E (Form 1040) as part of your farming businesses, you must combine the income, deductions, and net gain/loss for purposes of determining whether you have an excess farm loss on the worksheets. If you sold any property used in your farming businesses, you must include any gain or loss on the sale of that property (reported on Form 4797, Sales of Business Property, or Schedule D (Form 1040), Capital Gains and Losses). Be sure to include the gain or loss attributable to property used in your farming business (defined earlier). Do not include gain or loss attributable to property used in nonfarming businesses or nonbusiness property.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2587
Activities reported on other forms.(p10)
Because your farming business includes any trade or business of processing a farm commodity that is not incidental to your farm, you may have farming business activities that are reported on Schedule C (Form 1040) that you must also include when figuring your excess farm loss. Any losses from a farming business activity reported on Schedule C (Form 1040) may be limited by the excess farm loss rules.
Because your farming business includes your interest in a partnership or S corporation, you may have farming business activities that are reported on Schedule E (Form 1040) that you must also include when figuring your excess farm loss. Any losses from a farming business activity reported on Schedule E (Form 1040) may be limited by the excess farm loss rules.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2599
Other deductions that must be included.(p10)
Certain deductions, including the domestic production activities deduction under section 199 and the deduction for one-half of self-employment tax, may need to be included when determining your excess farm loss if the deductions are attributable to your farming business (defined earlier).
In particular, the deduction for one-half of self-employment tax will not be attributable to your farming business on Schedule F (Form 1040) or your business of processing a farm commodity on Schedule C (Form 1040) if the combined amounts on those schedules produce a loss. But the deduction for one-half of self-employment tax should be taken into account when the combined amounts on those schedules produce income (or the farm optional method on Schedule SE (Form 1040) is used) and there is a large loss on Schedule E (Form 1040) passed through from a partnership or S corporation.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2610
Deductions that are not included.(p10)
Any deduction for losses arising from fire, storm, or other casualty, or from disease or drought involving any farming business should not be included when determining your excess farm loss.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2618
Coordination with at-risk and passive activity loss rules.(p10)
You must calculate and apply your excess farm loss before calculating any limits due to the at-risk rules or the passive activity loss rules.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2628
Excess farm loss worksheets. (p11)
You may complete one of these worksheets to determine if you have an excess farm loss in 2013. Do not attach these worksheets to your return; keep them for your records. You will need them next year when any excess farm loss may be deducted. Which worksheet you should use depends on the nature and extent of your farming business.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2660
Applying your excess farm loss.(p11)
For Use in Tax Year 2013
rule
You must reduce your loss by the amount of your excess farm loss. Subtract line 33 from line 9 and reduce the number by your excess farm loss. Complete line 36 before entering an amount on line 34.

Example.(p11)

Subtracting line 33 from line 9 results in ($400,000). You have only one farming business and use Worksheet 1 to figure an excess farm loss of ($100,000). Your allowable loss is reduced to ($300,000). This will be the amount you enter on line 34 unless the at-risk or passive activity loss rules reduce it further.
Any loss from this activity not allowed for 2013 because of the excess farm loss rules is treated as a deduction allocable to the activity in 2014.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2680
At-risk and passive activity loss rules.(p11)
Use your loss reduced by the excess farm loss to calculate any further limitations due to the at-risk rules or passive activity loss rules.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2691
More than one farming business.(p11)
If you have more than one farming business with a loss this year, allocate the excess farm loss amount on a pro rata basis among those farming businesses. If you have more than one farming business, but only one has a loss, allocate all of the excess farm loss to the farming business with the loss. Do not allocate excess farm loss to a farming business that has a net profit.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2700

Line 36(p11)

For Use in Tax Year 2013
rule
taxtip
You do not need to complete line 36 if line 9 is more than line 33.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2710
At-risk rules.(p11)
For Use in Tax Year 2013
rule
In most cases, if you have a loss from a farming activity and amounts invested in the activity for which you are not at risk, you must complete Form 6198 to figure your allowable loss. The at-risk rules generally limit the amount of loss (including loss on the disposition of assets) you can claim to the amount you could actually lose in the activity.
Check box 36b if you have amounts invested in this activity for which you are not at risk, such as the following.
taxmap/instr/i1040sf-007.htm#en_us_publink17152rd0e2750
Figuring your allowable loss.(p11)
For Use in Tax Year 2013
rule
Before determining your allowable loss, you must check box 36a or 36b to determine if your loss from farming is limited by the at-risk rules. Follow the instructions below that apply to your box 36 activity.
taxmap/instr/i1040sf-007.htm#en_us_publink1000307983
All investment is at risk.(p11)
If all your investment amounts are at risk in this activity, check box 36a. If you also checked the Yes box on line E, your remaining loss (after applying the excess farm loss rules) is your allowable loss. The at-risk rules and the passive activity loss rules do not apply. See Line 34, earlier, for how to report your allowable loss.
But if you checked the No box on line E, you may need to complete Form 8582 to figure your allowable loss to enter on line 34. See the Instructions for Form 8582.
taxmap/instr/i1040sf-007.htm#en_us_publink1000307984
Some investment is not at risk.(p11)
If some investment is not at risk, check box 36b; the at-risk rules apply to your loss. Be sure to attach Form 6198 to your return.
If you also checked the Yes box on line E, complete Form 6198 to determine the amount of your allowable loss. The passive activity loss rules do not apply. See Line 34, earlier, for how to report your allowable loss.
But if you checked the No box on line E, the passive activity loss rules may apply. First complete Form 6198 to figure the amount of your profit or loss for the at-risk activity, which may include amounts reported on other forms and schedules, and the at-risk amount for the activity. Follow the Instructions for Form 6198 to determine how much of your Schedule F loss will be allowed. After you figure the amount of your loss that is allowed under the at-risk rules, you may need to complete Form 8582 to figure the allowable loss to enter on line 34. See the Instructions for Form 8582 for details.
caution
If you checked box 36b because some investment is not at risk and you do not attach Form 6198, the processing of your return may be delayed.
taxmap/instr/i1040sf-007.htm#en_us_publink10001068
At-risk loss deduction.(p11)
For Use in Tax Year 2013
rule
Any loss from this activity not allowed for 2013 only because of the at-risk rules is treated as a deduction allocable to the activity in 2014.
taxmap/instr/i1040sf-007.htm#en_us_publink10001069
More information.(p12)
For Use in Tax Year 2013
rule
For details, see Pub. 925 and the Instructions for Form 6198.