§464 — Limitations on deductions for certain farming expenses
18 cases·4 followed·2 distinguished·1 criticized·11 cited—22% support
Statute Text — 26 U.S.C. §464
In the case of any taxpayer to whom subsection (d) applies, a deduction (otherwise allowable under this chapter) for amounts paid for feed, seed, fertilizer, or other similar farm supplies shall only be allowed for the taxable year in which such feed, seed, fertilizer, or other supplies are actually used or consumed, or, if later, for the taxable year for which allowable as a deduction (determined without regard to this section).
In the case of any taxpayer to whom subsection (d) applies—
the cost of poultry (including egg-laying hens and baby chicks) purchased for use in a trade or business (or both for use in a trade or business and for sale) shall be capitalized and deducted ratably over the lesser of 12 months or their useful life in the trade or business, and
the cost of poultry purchased for sale shall be deducted for the taxable year in which the poultry is sold or otherwise disposed of.
Subsection (a) shall not apply to any amount paid for supplies which are on hand at the close of the taxable year on account of fire, storm, or other casualty, or on account of disease or drought.
This subsection applies to any taxpayer for any taxable year if such taxpayer—
does not use an accrual method of accounting,
has excess prepaid farm supplies for the taxable year, and
is not a qualified farm-related taxpayer.
For purposes of this subsection, the term “qualified farm-related taxpayer” means any farm-related taxpayer if—
the aggregate prepaid farm supplies for the 3 taxable years preceding the taxable year are less than 50 percent of,
the aggregate deductible farming expenses (other than prepaid farm supplies) for such 3 taxable years, or
the taxpayer has excess prepaid farm supplies for the taxable year by reason of any change in business operation directly attributable to extraordinary circumstances.
For purposes of this paragraph, the term “farm-related taxpayer” means any taxpayer—
whose principal residence (within the meaning of section 121) is on a farm,
who has a principal occupation of farming, or
who is a member of the family (within the meaning of section 461(k)(2)(E)) of a taxpayer described in clause (i) or (ii).
For purposes of this subsection—
The term “excess prepaid farm supplies” means the prepaid farm supplies for the taxable year to the extent the amount of such supplies exceeds 50 percent of the deductible farming expenses for the taxable year (other than prepaid farm supplies).
The term “prepaid farm supplies” means any amounts which are described in subsection (a) or (b) and would be allowable for a subsequent taxable year under the rules of subsections (a) and (b).
The term “deductible farming expenses” means any amount allowable as a deduction under this chapter (including any amount allowable as a deduction for depreciation or amortization) which is properly allocable to the trade or business of farming.
For purposes of this section, the term “farming” means the cultivation of land or the raising or harvesting of any agricultural or horticultural commodity including the raising, shearing, feeding, caring for, training, and management of animals. For purposes of the preceding sentence, trees (other than trees bearing fruit or nuts) shall not be treated as an agricultural or horticultural commodity.
18 Citing Cases
R contends that under IRC section 464 and 26 CFR section 1.162-3 P may deduct the cost ofthose materials only for the year in which P uses them.
Fourth, the IRA places restrictions on the alienation ofcorporate stock and ofcertain corporate-owned land. See id. ("no sale, devise, gift, exchange, or other transfer ofrestricted Indian lands or ofshares in the assets ofany Indian tribe or corporation organized under this Act shall be made or approved", subject to provisos); id.
Fourth, the IRA places restrictions on the alienation of corporate stock and of certain corporate-owned land. See id. (“no sale, devise, gift, exchange, or other transfer of restricted Indian lands or of shares in the assets of any Indian tribe or corporation organized under this Act shall be made or approved”, subject to provisos); id. s
See, for example, section 267 (transactions between related parties) and section 464 (farming syndicates).
s Pursuant to section 6402(c) and (d), the Commissioner is legally required to transfer any existing Federal income tax overpayments of a taxpayer to satisfy any obligations of the taxpayer identified in that section, viz, amounts of past-due support owed by that person of which the Secretary has been - 11 - notified by a State in accordance with section 464 of the Social Security Act and amounts owed to Federal agencies.
See, for example, section 267 (transactions between related parties) and section 464 (farming syndicates).
However, section 6402(c) provides: The amount of any overpayment to be refunded to the person making the overpayment shall be reduced by the amount of any past-due support (as defined in section 464(c) of the Social Security Act) owed by that person of which the Secretary has been notified by a State in accordance with section 464 of the Social Security Act.