FARM RECORDS

1
FARM RECORDS

• INCOME TAX

2
REVIEW
RECORD ANALYSIS

• 1. MGT MEASURES ARE RELATIVE NOS THAT ALLOW US
  TO COMPARE BETWEEN FARMS
• 2. THE MAJOR AREAS FOR COMPARISON ARE
• A. FINANCIAL POSITION
• B. PROFITABILITY
• C. REPAYMENT CAPACITY
• D. FINANCIAL EFFICIENCY
• 3. NON FINANCIAL PERFORMANCE RATIO ANALYZE
  ENTERPRISE PERFORMANCE

3
FARM RECORD CONCEPTS

• 1. INTRODUCTION TO RECORDS
• 2. ACCOUNTING EQUATION
• 3. BALANCE SHEET
• 4. INCOME STATEMENT
• 5. INVENTORY
• 6. DEPRECIATION
• 7. ACCOUNTING METHODS
• 8. CASH FLOW
• 9. RECORD SYSTEMS
• 10. COMPUTERIZED RECORDS
• 11. LABOR RECORDS
• 12. RECORD ANALYSIS
• 13. INCOME TAX

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TEXTBOOK READINGSON INCOME TAX

• KAY EDWARDS,
• FARM MANAGEMENT
• PAGE ??

FARM RECORDS RESOURCE BOOK PAGE ??
5
LESSON OBJECTIVES
INCOME TAX
AFTER THE LESSON, THE STUDENT SHOULD BE ABLE TO

• 1. CORRECTLY INDICATE WHICH IRS FORM VARIOUS
  ITEMS GO ON.
• 2. DISTINGUISH BETWEEN DEDUCTIONS, EXEMPTIONS,
  CREDITS, DEFFERALS AND INDICATE THEIR EFFECT ON
  TAXES PAID
• 3. CORRECT FILL OUT IRS FORMS F, 1062, 4797 SE
  FROM ENTRIES RECORDS IN THE OHIO COMMERCIAL FARM
  ACCOUNT BOOK.

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INCOME TAX

• DISCUSSION POINTS
• I. Forms Related To Farm Use
• SCH F, 4562, 4136, SE, 4797

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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
I. SCHEDULE F Profit or Loss From Farming 1040).
A. Heading
Name of proprietor
Social security number (SSN)
A Principal product. Describe in one or two words
your principal crop or activity for the current
tax year
.
B Enter code from Part IV
C Accounting method (1) Cash (2) Accrual
D Employer ID number (EIN), if any
E Did you materially participate in the
operation of this business during 2002? If No,
see page F-2 for limit on passive losses. Yes No
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
SCHEDULE F Profit or Loss From Farming 1040).
Part 1 Farm IncomeCash Method. Complete Parts I
and II (Accrual method taxpayers complete Parts
II and III, and line 11 of Part I.) Do
not include sales of livestock held for draft,
breeding, sport, or dairy purposes report these
sales on Form 4797.
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
1 Sales of livestock and other items you bought
for resale 1 2 Cost or other basis of livestock
and other items reported on line 2 3 Subtract
line 2 from line 3 4 Sales of livestock, produce,
grains, and other products you raised
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
5a Total cooperative distributions (Form(s)
1099-PATR) 5b Taxable amt 6a Agricultural program
payments (see page F-2) 6b Taxable amt 7
Commodity Credit Corporation (CCC) loans (see
page F-3) 7a CCC loans reported under
election 7b CCC loans forfeited 7c Taxable
amount 8 Crop insurance proceeds and certain
disaster payments 9 Custom hire (machine work)
income 10 Other income, incl Federal st
gasoline/ fuel tax credit or refund 11 Gross
income (cash) from operating activities .
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
Part III Farm IncomeAccrual Method. Do not
include sales of lvstk held for draft, breeding,
sport, or dairy purposes report these sales on
Form 4797 and do not include this livestock on
line 46 below.
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
38 Sales of livestock, produce, grains, and other
products during the year 39a Total cooperative
distributions (Form 1099-PATR) 40a Agricultural
program payments 41 Commodity Credit Corporation
(CCC) loans 41a CCC loans reported under
election 41b CCC loans forfeited 42 Crop
insurance proceeds 43 Custom hire (machine work)
income 44 Other income, including Federal st
gasoline or fuel tax credit or refund 45 Add
amounts in the right column for lines 38 through
44
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
46 Inventory of livestock, produce, grains,
other products at beg of yr 47 Cost of
lvstk, produce, grains other products purchased
during yr 48 Add lines 46 and 47 49
Inventory of livestock, produce, grains other
products at end of yr 50 Cost of livestock,
produce, grains, other products sold. 51
Gross income. Subtract line 50 from line 45.
Enter here pg 1, line 11
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
Part II Farm ExpensesCash Accrual Method. Do
not include personal or living expenses such as
taxes, insurance, repairs, etc., on your home.
2
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
Part II Farm ExpensesCash Accrual Method. Do
not include personal or living expenses such as
taxes, insurance, repairs, etc., on your home.
12 Farm Car Truck expense 13 Chemicals
14Conservation expenses 15 Custom hire (machine
work) 16 Dep sect 179 exp deduction 17
Employee benefit prog other than on line 25 18
Feed Purchased 19 Fertilizers and lime 20
Freight and trucking 21 Gasoline, fuel, and oil
20 22 Insurance (other than health) 23
Interest a Mortgage b Other Car 24. Labor
Hired
2
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
Part II Farm Expenses Cash Accrual Method. Do
not include personal or living expenses such as
taxes, insurance, repairs, etc., on your home.
25 Pension Profit Sharing 26. Rent or lease
a. Vehicles, mach, equip b Other (land,
animals, 27 Repairs maintenance 28 Seeds
plants purchased 29 Storage and warehousing 30
Supplies purchased 31 Farm Property Taxes 32 Farm
Utilities 33 Vet, breeding, medicine 34 Other
expenses (specify)
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
FORM 4562 DEPRECIATION
A. 1ST YR BONUS DEPRECIATION 1. INCREASES 30
FIRST YR BONUS TO 50 2. NEW EQUIP,
VECHILES, OFFICE EQUIP, SPEC BLDINGS, TILE, OR
CAPITALIZED REPAIRS 3. PURCHASED BETWEEN
MAY6,2003 DEC 31,2005
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
FORM 4562 DEPRECIATION
B. SECTION 179 PROPERTY 1. EXPENSE UP TO
100,000 2. FOR NEW OR USED MACHINERY, BLDG,
TILE 3. PURCHASED BETWEEN JAN 1,2003 DEC
31,2005 4. TAX BREAK CANT EXCEED TAXABLE
INCOME 5. PURCHASES CANT EXCEED 400,000
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
FORM 4562 DEPRECIATION BACK SIDE LISTED PROP
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
FORM 4136 GAS TAX REFUND
.
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Learning Objective
CORRECTLY INDICATE WHICH IRS FORM VARIOUS ITEMS
GO ON.
1
FORM SE SELF EMPLOYMENT SOCIAL SECURITY
.
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ASSOCIATED LABORATORY ACTIVITY
INCOME TAX

• DURING LAB 10 YOU WILL BE GIVEN A CHANCE TO FILL
  OUT TAX FORMS FOR THE LAB SIMULATION FARM.