← FarmCPA Home

Crop Insurance Proceeds on Feed Consumed by Livestock

By: | Trackback URL | 1 Comment

February 10th, 2013

We received the following question(s) from a reader:

“My husband and I received crop insurance proceeds this year due to drought. It was for hay and pasture losses. The insurance company classifies the crop as “forage”. If this was hay we would normally feed to our cows in the following year may we defer this income to 2013?”

As we have previously posted, crop insurance proceeds can be deferred if the normal practice is to receive more than 50% of crop proceeds in the following year.  The reason for this provision to prevent a bunching up of income in one tax year due to receiving crop sales from the previous year plus the crop insurance proceeds.  However, with the introduction of farm income averaging several years ago, this is not the problem that it used to be.

With regards to hay used to feed your cows, receiving crop insurance proceeds for this loss is not deferrable.  The premise for denying this is that you are not bunching up income in one tax year.  Rather, the crop insurance proceeds that a farmer is receiving is being used to purchase feed that is deductible and thus, the additional feed cost incurred during the year would offset the crop insurance proceeds.

Paul Neiffer, CPA

 

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation.

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    When "bullish" corn reports lead to flat closes what is Mr. Market telling you. Be careful. 2 weeks ago

    2010 spring corn price was $3.99. Only four years ago. 2 weeks ago

    Two good days to lock in decent prices on corn and beans. Did you take advantage of the opportunity 3 weeks ago

    Very little change on corn intentions in key corn belt state. Almost all reductions in fringe states such as ND down 1 million acre 3 weeks ago

    North Dakota up 1 million Minnesota up 700k and Nebraska up 600k represent almost half of the 5 million increase in bean acres 3 weeks ago

    Just spoke for 45 minutes on new farm bill to a group of 100 Minnesota and Wisconsin Co-op board members. No one fell asleep. 4 weeks ago

    Hard to beat spring time in the Pacific Northwest. 4 weeks ago

    Kansas City can be windy this time of year. Just got done taping with a farm family. Check it out on #agday next Friday 1 month ago

    I think spring has sprung in our area. 1 month ago

    April hogs 116 limit up! Can they hit 120 1 month ago