U.S. Income Tax Return for Estates and Trusts

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2025

Instructions for Schedule F
(Form 1040)
Profit or Loss From Farming
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments
For the latest information about developments related to
Schedule F (Form 1040) and its instructions, such as legislation
enacted after they were published, go to IRS.gov/ScheduleF.

What’s New
Bonus depreciation. The 100% special depreciation
allowance is restored for qualified property acquired after
January 19, 2025. However, property put into service between
January 1, 2025, and January 19, 2025, or acquired before
January 20, 2025, and put into service later will remain subject to
the phase-down rules under prior law. For more information, see
Form 4562, Depreciation and Amortization, and its instructions.
Increased section 179 deduction dollar limits. For tax years
beginning in 2025, the maximum section 179 expense deduction
is $2,500,000. This amount is reduced by the amount by which
the cost of section 179 property placed in service during the year
exceeds $4,000,000.
Business interest expense limitation. The business interest
expense in your farming activity may be limited. For tax years
beginning in 2025, the calculation of adjusted taxable income
includes a requirement to add back to taxable income the
deductions for depreciation, amortization, and depletion to arrive
at the amount that is used to determine if your interest expense
is limited. For more information, see Form 8990, Limitation on
Business Interest Expense Under Section 163(j), and its
instructions.
No tax on car loan interest. If you are self-employed and use
your vehicle for personal and business use, you may be eligible
to take a deduction for the interest for the personal use on
Schedule 1-A (Form 1040). You can only deduct the part of the
interest expense that represents the business use of your vehicle
in the farming activity on Schedule F (Form 1040). See the
Instructions for Schedule 1-A (Form 1040) for more information.
Election to pay tax on farmland sale or exchange in installments. P.L. 119-21, commonly known as the One Big Beautiful
Bill Act, created a new section 1062 that allows taxpayers to
elect to pay the net income tax attributable to the gain on the
sale or exchange of qualified farmland property to a qualified
farmer through four equal annual installments beginning in the
year of sale or exchange. This election is available for tax years
beginning after July 4, 2025. For more information, see section
1062 and the new Form 1062 when it becomes available.
Expansion of tax relief in disaster situations. The eligibility
and filing procedures for claiming a personal casualty loss as a
result of a disaster have been expanded. For more information,
see Pub. 225, Farmer’s Tax Guide, and Pub. 547, Casualties,
Disasters, and Thefts.
Nov 20, 2025

Farmers and ranchers affected by drought may be eligible
for extension of tax relief. Farmers and ranchers forced to sell
certain livestock because of drought conditions may have more
time to replace their livestock and defer tax on any gains from
the forced sales. See IRS extends relief to farmers and ranchers
in 49 states and other areas.
Form 1040-SS, Part III, has been replaced. Schedule F
(Form 1040) is now filed with Form 1040-SS, if applicable. For
additional information, see the Instructions for Form 1040-SS.
Excess business loss limitation rules. The limitation on
excess business losses for noncorporate taxpayers is applicable
for 2025. See Form 461, Limitation on Business Losses, and its
instructions for details on the amount of the excess business loss
limitation.
Form 7205, Energy Efficient Commercial Buildings Deduction. This form and its separate instructions are used to claim
the section 179D deduction for qualifying energy efficient
commercial building expenses.
Deduction for qualified business income. For tax years
beginning after 2017, you may be entitled to a deduction of up to
20% of your qualified business income from your qualified trade
or business, plus 20% of the aggregate amount of qualified real
estate investment trust (REIT) dividends and qualified publicly
traded partnership (PTP) income. The deduction is subject to
various limitations, such as limitations based on your type of
trade or business, your taxable income, the amount of W-2
wages paid with respect to the trade or business, and the
unadjusted basis immediately after acquisition of qualified
property held by the trade or business.
Special rules also exist for patrons of specified agricultural or
horticultural cooperatives, including the following.
• Distributions from a cooperative that are included in a patron’s
qualified business income and are identified on Form
1099-PATR as qualified payments are subject to the patron
reduction.
• A cooperative’s section 199A(g) deduction passed through to
a patron on the Form 1099-PATR is included in the patron’s
qualified business income deduction.
You will claim the deduction for qualified business income on
Form 1040 or 1040-SR. This deduction can be taken in addition
to the standard or itemized deductions. For more information,
see the Instructions for Form 1040 and Pub. 334, Tax Guide for
Small Business.
Form 172. Form 172, Net Operating Losses (NOLs) for
Individuals, Estates, and Trusts, is a new form for figuring net
operating losses (NOLs). This form replaces Schedules A and B
(Form 1045).
Net operating loss (NOL). An NOL can no longer be carried
back, unless the NOL is a farming loss. If you have an NOL
attributable to farming, you must carry it back to each of the 2 tax
years preceding the tax year of the loss, unless you elect to forgo
the carryback. Farming businesses can elect to forgo the

Instructions for Schedule F (Form 1040) (2025) Catalog Number 17152R
Department of the Treasury Internal Revenue Service www.irs.gov

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Standard mileage rate. The business standard mileage rate is
70 cents a mile for 2025.

Reminders

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carryback and carry forward the farm NOL to a later year. For
additional information on NOLs for individuals, estates and
trusts, and corporations, see Pub. 225 and Form 172 and its
instructions.
Small business taxpayers. For tax years beginning after 2017,
more small business taxpayers may be eligible to use the cash
method of accounting. See Small business taxpayer, later.

General Instructions
Use Schedule F (Form 1040) to report farm income and
expenses. File it with Form 1040, 1040-SR, 1040-SS, 1040-NR,
1041, or 1065.
Your farming activity may subject you to state and local taxes
and other requirements such as business licenses and fees.
Check with your state and local governments for more
information.
Additional information. Pub. 225 has more information and
examples to help you complete your farm tax return. It also lists
important dates that apply to farmers.

• Schedule E (Form 1040), Part I, to report rental income from
pastureland based on a flat charge, and to report farm rental
income and expenses of a trust or estate based on crops or
livestock produced by a tenant. However, report pasture income
received from taking care of someone else’s livestock on
Schedule F (Form 1040), line 8.
• Schedule J (Form 1040) to figure your tax by averaging your
farm income over the previous 3 years. Doing so may reduce
your tax.
• Schedule SE (Form 1040) to pay self-employment tax on
income from your farming business.
• Form 172 to figure the net operating loss (NOL).
• Form 461 to figure excess business loss.
• Form 3800 to claim any general business credits.
• Form 4562 to claim depreciation (including the special
allowance) on assets placed in service in 2025, to claim
amortization that began in 2025, to make an election under
section 179 to expense certain property, or to report information
on vehicles and other listed property.
• Form 4684 to report a casualty or theft gain or loss involving
farm business property, including purchased livestock held for
draft, breeding, sport, or dairy purposes. See Pub. 225 for more
information on how to report various farm losses, such as losses
due to death of livestock or damage to crops or other farm
property.
• Form 4797 to report sales, exchanges, or involuntary
conversions (other than from a casualty or theft) of certain farm
property. Also, use this form to report sales of livestock held for
draft, breeding, sport, or dairy purposes.
• Form 4835 to report rental income based on crop or livestock
shares produced by a tenant if you didn’t materially participate in
the management or operation of a farm. This income isn’t
subject to self-employment tax. See Pub. 225.
• Form 6198 to figure your allowable loss if you have a business
loss and you have amounts invested in the business for which
you aren’t at risk.
• Form 7205 to claim the section 179D deduction for a
qualifying energy efficient commercial building.
• Form 8300 to report cash payments over $10,000 received in
a trade or business.
• Form 8582 to figure your allowable loss from passive
activities.
• Form 8824 to report like-kind exchanges of business or
investment property.
2

Single-member limited liability company (LLC). Generally, a
single-member domestic LLC isn’t treated as a separate entity
for federal income tax purposes. If you are the sole member of a
domestic LLC engaged in the business of farming, file
Schedule F (Form 1040). However, you can elect to treat a
domestic LLC as a corporation. See Form 8832 for details on the
election.
Heavy highway vehicle use tax. If you use certain highway
trucks, truck-trailers, tractor trailers, or buses in your farming
business, you may have to pay a federal highway motor vehicle
use tax. See the Instructions for Form 2290 to find out if you owe
this tax and go to IRS.gov/Trucker for the latest developments.
Information returns. You may have to file information returns
for wages paid to employees, certain payments of fees and other
nonemployee compensation, interest, rents, royalties, real estate
transactions, annuities, and pensions. For details, see Line F,
later, and the 2025 General Instructions for Certain Information
Returns.
If you received cash of more than $10,000 in one or more
related transactions in your farming business, you may have to
file Form 8300. For details, see Pub. 1544.
Reportable transactions disclosure statement. If you
entered into a reportable transaction in 2025, you must file Form
8886 to disclose certain information, as required by Treas. Reg.
section 1.6011-4 and the Instructions for Form 8886. You may
have to pay a penalty if you are required to file Form 8886 but
don’t do so. You may also have to pay interest and penalties on
any reportable transaction understatements. For more
information on reportable transactions, see the Instructions for
Form 8886.

Farm Owned and Operated by Spouses

If you and your spouse jointly own and operate a farm as an
unincorporated business and share in the profits and losses, you
can file Form 1065 and be treated as a partnership, or you each
can file Schedule F (Form 1040) as a qualified joint venture.

Qualified Joint Venture (QJV)
If you and your spouse each materially participate as the only
members of a jointly owned and operated farm, and you file a
joint return for the tax year, you can elect to be treated as a QJV
instead of a partnership. This election, in most cases, won’t
increase the total tax owed on the joint return, but it does give
each of you credit for social security earnings on which
retirement benefits are based and for Medicare coverage without
filing a partnership return. For an explanation of “material
participation,” see the instructions for Schedule C (Form 1040),
line G; and Line E, later.
Making the election. To make this election, you must divide all
items of income, gain, loss, deduction, and credit attributable to
the farming business between you and your spouse in
accordance with your respective interests in the venture. Each of
you must file a separate Schedule F (Form 1040). On each line
of your separate Schedule F (Form 1040), you must enter your
share of the applicable income, deduction, or loss. Each of you

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Other Schedules and Forms You May
Have To File

• Form 8990 to figure any amount of business interest expense
that is not subject to the interest expense limitation and to figure
the amount you can carry forward. However, a small business
taxpayer is not subject to the business interest expense
limitation and is not required to file Form 8990. Also, certain
farming businesses and specified agricultural or horticultural
cooperatives can make an election not to have the limitation
apply.
• Form 1045 to request a refund such as resulting from a
carryback loss.

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must also file a separate Schedule SE (Form 1040) to pay
self-employment tax, as applicable.
As long as you remain qualified, your election can’t be
revoked without IRS consent.
For more information on QJVs, go to IRS.gov/QJV.

Exception—Community Income
If you and your spouse wholly own an unincorporated farming
business as community property under the community property
laws of a state, foreign country, or U.S. territory, you can treat
your wholly owned, unincorporated business as a sole
proprietorship, instead of a partnership. Any change in your
reporting position will be treated as a conversion of the entity.
Report your income and deductions as follows.

income from that business is the self-employment earnings of
the spouse who carried on the business.
• If both spouses participate, the income and deductions are
allocated to the spouses based on their distributive shares.
• If either or both you and your spouse are partners in a
partnership, see Pub. 541.
• If you and your spouse elected to treat the business as a QJV,
see Qualified Joint Venture (QJV), earlier, for how to report
income and deductions.
States with community property laws include Arizona,
California, Idaho, Louisiana, Nevada, New Mexico, Texas,
Washington, and Wisconsin. See Pub. 555 for more information
about community property laws.

Estimated Tax

If you had to make estimated tax payments for 2025, and you
underpaid your estimated tax, you won’t be charged a penalty if
both of the following apply.
• Your gross farming or fishing income for 2024 or 2025 is at
least two-thirds of your gross income.
• You file your 2025 tax return and pay the tax due by March 2,
2026.
For details and alternative ways to avoid the estimated tax
penalty, see the Instructions for Form 2210-F and chapter 15 of
Pub. 225.

Specific Instructions
Filers of Forms 1041 and 1065. Don’t complete the block
labeled “Social security number (SSN).” Instead, enter the
employer identification number (EIN) issued to the estate, trust,
or partnership on line D.

Line B

On line B, enter one of the 17 principal agricultural activity codes
listed in Part IV on page 2 of Schedule F (Form 1040). Select the
code that best describes the source of most of your income.

Line C

If you use the cash method, check the box for “Cash.” Complete
Schedule F (Form 1040), Parts I and II. In most cases, report
income in the year in which you actually or constructively
received it and deduct expenses in the year you paid them.
However, if the payment of an expenditure creates an intangible
asset (such as a prepaid expense) having a useful life that
extends beyond the earlier of 12 months after the creation of the
benefit or the end of the next tax year, it may not be deductible or

If you use the accrual method, check the box for “Accrual.”
Complete Schedule F (Form 1040), Part I, line 9; Part II; and Part
III. Generally, report income in the year in which you earned it
and deduct expenses in the year you incurred them, even if you
didn’t pay them in that year. Accrual-basis taxpayers are put on a
cash basis for deducting business expenses owed to a related
cash-basis taxpayer. Other rules determine the timing of
deductions based on economic performance. See Pub. 538,
Accounting Periods and Methods.
Farming syndicates. Farming syndicates can’t use the cash
method of accounting. A farming syndicate may be a
partnership, an LLC, an S corporation, or any other enterprise
other than a C corporation if:
• The interests in the business have at any time been offered for
sale in a way that would require registration with any federal or
state agency, or
• More than 35% of the losses during any tax year are allocable
to limited partners or limited entrepreneurs. A limited partner is
one who can lose only the amount invested or required to be
invested in the partnership. A limited entrepreneur is a person
who doesn’t take any active part in managing the business.

Line D

Enter on line D the EIN that was issued to you on Form SS-4.
Don’t enter your SSN. Don’t enter another taxpayer’s EIN (for
example, from any Forms 1099-MISC that you received). If you
don’t have an EIN, leave line D blank.

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• If only one spouse participates in the business, all of the

may be deductible only in part for the year of the payment. See
chapter 2 of Pub. 225.

You need an EIN only if you have a qualified retirement plan
or are required to file employment, excise, alcohol, tobacco, or
firearms returns, or if you are a payer of gambling winnings. If
you need an EIN, see the Instructions for Form SS-4.
Single-member LLCs. If you are a sole owner of an LLC that
isn’t treated as a separate entity for federal income tax purposes,
you may have an EIN that was issued to the LLC (and in the
LLC’s legal name) if you are required to file employment tax
returns and certain excise tax returns. However, you should
enter on line D only the EIN issued to you and in your
name as the sole proprietor of your farming business. If you
don’t have such an EIN, leave line D blank. Don’t enter on line D
the EIN issued to the LLC.
Single-member LLCs with employees. Single-member LLCs
that are disregarded as entities separate from their owners for
federal income tax purposes are required to file employment tax
returns using the LLC’s name and EIN rather than the LLC
owner’s name and EIN. For more information, see the
Instructions for Form SS-4.
Filers of Forms 1041 and 1065. Enter on line D the EIN issued
to the estate, trust, or partnership.

Line E
Material participation. For the definition of “material
participation” for purposes of the passive activity rules, see the
instructions for Schedule C (Form 1040), line G. If you meet any
of the material participation tests described in those instructions,
check the “Yes” box.
If you are a retired or disabled farmer, you are treated as
materially participating in a farming business if you materially
participated 5 or more of the 8 years preceding your retirement
or disability. Also, a surviving spouse is treated as materially
participating in a farming activity if the surviving spouse actively
manages the farm and the real property used for farming meets
the estate tax rules for special valuation of farm property passed
from a qualifying decedent.
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Check the “No” box if you didn’t materially participate. If you
checked “No” and you have a loss from this business, see Limit
on passive lossesnext. If you have a profit from this business
activity but have current-year losses from other passive activities
or prior-year unallowed passive activity losses, see the
Instructions for Form 8582.
Limit on passive losses. If you checked the “No” box and you
have a loss from this business, you may have to use Form 8582
to figure your allowable loss, if any, to enter on Schedule F (Form
1040), line 34. In most cases, you can deduct losses from
passive activities only to the extent of income from passive
activities. For details, see Pub. 925.
Note: Form 1040-SS filers, skip this line.

Line F

If you made any payments in 2025 that would require you to file
any Forms 1099, check the “Yes” box. Otherwise, check the “No”
box. See the 2025 General Instructions for Certain Information
Returns in Guide to Information Returns if you are unsure
whether you are required to file any Forms 1099. Also, see the
separate specific instructions for each Form 1099.
Note: Form 1040-SS filers, skip this line and line G.

prizes, medical and health care payments, and other
income payments. See the Guide to Information Returns in the
2025 General Instructions for Certain Information Returns, which
has more information, including the due dates for the various
information returns.

Part I. Farm Income—Cash Method

In Part I, show income received for items listed on lines 1 through
8. In most cases, include both the cash actually or constructively
received and the fair market value (FMV) of goods or other
property received for these items. Income is constructively
received when it’s credited to your account or set aside for you to
use.
If you received rents based on crop shares or farm production
and materially participated in the management or operation of a
farm, report these rents as income on line 2.
Sales of livestock because of weather-related conditions.
If you sold livestock because of drought, flood, or other
weather-related conditions, you can elect to report the income
from the sale in the year after the year of sale if all of the
following apply.
• Your main business is farming.
• You can show that you sold the livestock only because of
weather-related conditions.
• Your area qualified for federal aid.
See chapter 3 of Pub. 225 for details.
Chapter 11 bankruptcy. If you were a debtor in a chapter 11
bankruptcy case during 2025, see Chapter 11 Bankruptcy Cases
in the Instructions for Form 1040 (under Income) and the
Instructions for Schedule SE (Form 1040).
Forms 1099 or CCC-1099-G. If you received Forms 1099 or
CCC-1099-G showing amounts paid to you, first determine if the
amounts are to be included with farm income. Then, use the
following table to determine where to report the income on
Schedule F (Form 1040). Include the Form 1099 or CCC-1099-G
amounts in the total amount reported on that line.

4

1099-PATR . . . . . . . . . . . . . . . . . .
1099-A . . . . . . . . . . . . . . . . . . . . .
1099-MISC for crop insurance . . . . . . . .
1099-G or CCC-1099-G
• For disaster payments . . . . . . . . . .
• For other agricultural program payments

. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .

Line 3a
Line 5b
Line 6a
Line 6a
Line 4a

You may receive Form 1099-MISC for other types of income.
In this case, report it on whichever line best describes the
income. For example, if you receive a Form 1099-MISC for
custom farming work, include this amount on line 7. In most
cases, your business income will be in the form of cash, checks,
and debit/credit card payments. Therefore, you should consider
the amounts shown on Form 1099-K, Payment Card and Third
Party Network Transactions, along with all other amounts
received, when calculating gross receipts. (See Understanding
Your 1099-K on IRS.gov.)

Lines 3a and 3b

If you received distributions from a cooperative in 2025, you
should receive a Form 1099-PATR. On line 3a, show your total
distributions from cooperatives. This includes patronage
dividends, nonpatronage distributions, per-unit retain allocations,
and redemptions of nonqualified written notices of allocation and
per-unit retain certificates.
Show patronage dividends received in cash and the dollar
amount of qualified written notices of allocation. If you received
property as patronage dividends, report the FMV of the property
as income. Include cash advances received from a marketing
cooperative. If you received per-unit retains in cash, show the
amount of cash. If you received qualified per-unit retain
certificates, show the stated dollar amount of the certificates.
Don’t include as income on line 3b patronage dividends from
buying personal or family items, capital assets, or depreciable
assets. Enter these amounts on line 3a only. Because you don’t
report patronage dividends from these items as income, you
must subtract the amount of the dividend from the cost or other
basis of these items.

Lines 4a and 4b

Enter on line 4a the total of the government agricultural program
payments that you received. This includes the following
amounts.
• Price loss coverage payments.
• Agriculture risk coverage payments.
• Market Facilitation Program payments.
• Market gain from the repayment of a secured Commodity
Credit Corporation (CCC) loan for less than the original loan
amount.
• Diversion payments.
• Cost-share payments (sight drafts).
• Payments in the form of materials (such as fertilizer or lime) or
services (such as grading or building dams).
These amounts are usually reported to you on Form 1099-G.
You may also receive Form CCC-1099-G from the Department of
Agriculture showing the amounts and types of payments made to
you.
On line 4b, report only the taxable amount. For example, don’t
report the market gain shown on Form CCC-1099-G on line 4b if
you elected to report CCC loan proceeds as income in the year
received (see Lines 5a Through 5c) next. No gain results from
redemption of the commodity because you previously reported
the CCC loan proceeds as income. You are treated as

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Generally, you must file Form 1099-MISC or Form

TIP 1099-NEC if you paid at least $600 in rents, services,

Where to
report

Form

TREASURY/IRS AND OMB USE ONLY DRAFT
repurchasing the commodity for the amount of the loan
repayment. However, if you didn’t report the CCC loan proceeds
under the election, you must report the market gain on line 4b.

Lines 5a Through 5c
CCC loans. In most cases, you don’t report CCC loan proceeds
as income. However, if you pledge part or all of your production
to secure a CCC loan, you can elect to report the loan proceeds
as income in the year you receive them. If you make this election
(or made the election in a prior year), report loan proceeds you
received in 2025 on line 5a. Attach a statement to your return
showing the details of the loan(s). See chapter 3 of Pub. 225.

Lines 6a Through 6d

In most cases, you must report crop insurance proceeds in the
year you receive them. Federal crop disaster payments are
treated as crop insurance proceeds. However, if 2025 was the
year of damage, you can elect to include certain proceeds in
income for 2026. To make this election, check the box on line 6c
and attach a statement to your return. See chapter 3 of Pub. 225
for a description of the proceeds for which an election can be
made and for what you must include in your statement.
If you elect to defer any eligible crop insurance proceeds, you
must defer all such crop insurance proceeds (including federal
crop disaster payments) from a single trade or business.
Enter on line 6a the total crop insurance proceeds you
received in 2025, even if you elect to include them in income for
2026.
Enter on line 6b the taxable amount of the proceeds you
received in 2025. Don’t include proceeds you elect to include in
income for 2026.
Enter on line 6d the amount, if any, of crop insurance
proceeds you received in 2024 and elected to include in income
for 2025.

Line 8

Enter on line 8 income not otherwise reportable on lines 1
through 7. This includes the following types of income.
• Illegal federal irrigation subsidies. See chapter 3 of Pub. 225.
• Bartering income.
• Income from cancellation of debt. In most cases, if a debt is
canceled or forgiven, you must include the canceled amount in
income. If a federal agency, financial institution, or credit union
canceled or forgave a debt you owed of $600 or more, it should
send you a Form 1099-C, or similar statement, by January 31,
2026, showing the amount of debt canceled in 2025. However,
you may be able to exclude the canceled debt from income. See
Pub. 4681 for details.
• State gasoline or fuel tax refunds you received in 2025.
• Any amount included in income from line 3 of Form 6478,
Biofuel Producer Credit.

For property acquired and hedging positions
established, you must clearly identify on your books and
CAUTION records both the hedging transaction and the item(s) or
aggregate risk being hedged.

!

Purchase or sales contracts aren’t true hedges if they offset
losses that already occurred. If you bought or sold commodity
futures with the hope of making a profit due to favorable price
changes, report the profit or loss on Form 6781 instead of this
line.

Part II. Farm Expenses

Don’t deduct the following.
• Personal or living expenses (such as taxes, insurance, or
repairs on your home) that don’t produce farm income.
• Expenses of raising anything you or your family used that
would not have otherwise been deductible as an expense except
for the presence of the income-producing farm activity.
• The value of animals you raised that died.
• Inventory losses.
• Personal losses.

If you were repaid for any part of an expense during the same
year, you must subtract the amount you were repaid from the
deduction.

Capitalizing costs of producing property and acquiring
property for resale. If you produced real or tangible personal
property or acquired property for resale, you must generally
capitalize certain expenses to your inventory or other property.
These expenses include the direct costs of the property and any
indirect costs properly allocable to that property.
For tax years beginning after 2017, small business taxpayers,
defined later, are not required to capitalize costs under section
263A. Section 263A generally doesn’t apply to the following
expenses.
1. Producing any plant that has a preproduction period of 2
years or less.
2. Raising animals.
3. Replanting certain crops if they were lost or damaged by
reason of freezing temperatures, disease, drought, pests, or
casualty.
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Forfeited CCC loans. Include the full amount forfeited on
line 5b, even if you reported the loan proceeds as income. This
amount may be reported to you on Form 1099-A.
If you didn’t elect to report the loan proceeds as income, also
include the forfeited amount on line 5c.
If you did elect to report the loan proceeds as income, you
generally won’t have an entry on line 5c. But if the amount
forfeited is different from your basis in the commodity, you may
have an entry on line 5c.
See chapter 3 of Pub. 225 for details on the tax
consequences of electing to report CCC loan proceeds as
income or forfeiting CCC loans.

• Any amount included in income from line 10 of Form 8864,
Biodiesel, Renewable Diesel, or Sustainable Aviation Fuels
Credit.
• The amount of credit for federal tax paid on fuels claimed on
your 2024 Schedule 3 (Form 1040). For information on including
the credit in income, see chapter 2 of Pub. 510.
• Any recapture of excess depreciation on any listed property,
including any section 179 expense deduction, if the business
use percentage of that property decreased to 50% or less in
2025. Use Part IV of Form 4797 to figure the recapture. See the
instructions for Schedule C (Form 1040), line 13, for the
definition of “listed property.”
• The inclusion amount on leased listed property (other than
vehicles) when the business use percentage drops to 50% or
less. See chapter 5 of Pub. 946 to figure the amount.
• Any recapture of the deduction or credit for clean-fuel vehicle
refueling property or alternative fuel vehicle refueling property
used in your farming business. For details on how to figure
recapture, see section 30C(e)(5).
• Any income from breeding fees, or fees from renting teams,
machinery, or land that isn’t reported on Schedule E (Form 1040)
or Form 4835.
• The gain or loss on the sale of commodity futures contracts if
the contracts were made to protect you from price changes.
These are a form of business insurance and are considered
hedges. If you had a loss in a closed futures contract, enclose
the amount of the loss in parentheses.

Exceptions (1) and (2) don’t apply to tax shelters, farming
syndicates, partnerships, or corporations required to use the
accrual method of accounting under section 447 or 448(a)(3).
Special rules apply to exception (3) if replanting costs are
paid or incurred by a taxpayer other than the person described in
section 263A(d)(2)(A). See sections 263A(d)(2)(B) and (C) for
these different rules. Under section 263A(d)(2)(C), there is a
temporary rule for replanting costs of citrus plants that are paid
or incurred after December 22, 2017, and on or before
December 22, 2027.
Small business taxpayer. A small business taxpayer is one
that has gross receipts of $31 million or less for the 3 prior tax
years and is not a tax shelter, as defined in section 448(d)(3).
See also the inflation adjustment in Rev. Proc. 2024-40 (updated
annually), which increased the threshold for small business
taxpayers from $30 million to $31 million for tax years beginning
in 2025.
If you capitalize your expenses, don’t 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.
Election to deduct certain preproductive period expenses.
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 can’t 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.
In the case of a partnership or S corporation, the election
must be made by the partner, shareholder, or member.
CAUTION This election can’t 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 can’t revoke this election without IRS consent.
Special rules. If you make the election to deduct
preproductive expenses for plants:
• Any gain you realize when disposing of the plants is ordinary
income up to the amount of the preproductive expenses you
deducted, and
• The alternative depreciation rules apply to property placed in
service in any tax year your election is in effect.
For details, see Uniform Capitalization Rules in chapter 6 of
Pub. 225.
Prepaid farm supplies. 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
6

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
don’t 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.

Line 10

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 can’t
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 2025 only if you:

• Owned the vehicle and used the standard mileage rate for the

first year you placed the vehicle in service, or
• Leased the vehicle and are using the standard mileage rate
for the entire lease period.
If you take the standard mileage rate:

• Multiply the business standard mileage rate by 70 cents a

mile; and
• Add to this amount your parking fees and tolls, and enter the
total on line 10.
Don’t deduct depreciation, rent or lease payments, or your
actual operating expenses.
If you deduct actual expenses:

• Include on line 10 the business portion of expenses for

gasoline, oil, repairs, insurance, license plates, etc.; and
• Show depreciation on line 14 and rent or lease payments on
line 24a.
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.
If you use your vehicle for both business and personal
purposes and you claimed a deduction in 2025 on
CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest
allocable to your personal use, then you can’t claim a deduction
for that same interest on Schedule F. See Schedule 1-A (Form
1040) and its instructions for more information.

!

Line 12

Deductible conservation expenses are generally 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 aren’t limited to)
costs for the following.
• The treatment or movement of earth, such as leveling,
grading, conditioning, terracing, contour furrowing, and the
restoration of soil fertility.
• The construction, control, and protection of diversion
channels, drainage ditches, irrigation ditches, earthen dams,
watercourses, outlets, and ponds.
• The eradication of brush.
• The planting of windbreaks.
• The achievement of site-specific management actions
recommended in recovery plans approved pursuant to the
Endangered Species Act of 1973.

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These expenses can be deducted only if they’re 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 can’t deduct the expenses if they
were paid or incurred for land used in farming in a foreign
country.
Don’t deduct expenses you paid or incurred to drain or fill
wetlands, or to prepare land for center pivot irrigation systems.
Your deduction can’t 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 1 year
can’t exceed the 25% gross income limit for that year.
For details, see chapter 5 of Pub. 225.

Line 13

Don’t include amounts paid for rental or lease of equipment
you operated yourself. Instead, report those amounts on
line 24a.

Line 14

You can deduct depreciation of buildings, improvements, cars
and trucks, machinery, and other farm equipment of a permanent
nature.
Don’t deduct depreciation of 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 2025 for use in your
farming business. The section 179 election is made on Form
4562.
Special depreciation allowance. You can elect to claim a
100% special depreciation allowance for certain specified plants
bearing fruits and nuts planted or grafted after January 19, 2025.
In addition, you can elect to claim a 40% special depreciation
allowance for certain specified plants bearing fruits and nuts
planted or grafted after 2024 and before January 20, 2025. See
the Instructions for Form 4562 for more information.
Electing farming business. If you made an election not to
have the business interest expense limitation apply, any property
with a recovery period of 10 years or more held by you must be
depreciated under the alternative depreciation system. For
details, see Rev. Proc. 2019-08, available at IRS.gov/irb/
2019-03_IRB#RP-2019-08 (or its successor).
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.

Line 15

Deduct contributions to employee benefit programs that aren’t
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

Contributions you made on your behalf as a self-employed
person to an accident and health plan or for group-term life
insurance aren’t deductible on Schedule F (Form 1040).
However, you may be able to deduct on Schedule 1 (Form
1040), line 17, the amount you paid for health insurance on
behalf of yourself, your spouse, and your dependent(s) even if
you don’t itemize your deductions. See the instructions for
Schedule 1 (Form 1040), line 17, 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.

Line 16

If you use the cash method, you can’t deduct when paid the cost
of feed your livestock will consume in a later year unless all of
the following apply.
• The payment was for the purchase of feed rather than a
deposit.
• The prepayment had a business purpose and wasn’t made
merely to avoid tax.
• Deducting the prepayment won’t materially distort your
income.
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 don’t apply, you can deduct
the prepaid feed only in the year it’s consumed.

Line 18

Don’t 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.

Line 20

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 aren’t deductible. For
details, see chapter 4 of Pub. 225.

Lines 21a and 21b
Interest allocation rules. 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’s 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. 225 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. 225 to figure the amount to
include on lines 21a and 21b.
How to report. Before entering an amount on line 21a or 21b,
see the Instructions for Form 8990 to identify whether you are
required to limit your business interest expense or whether you
can elect not to limit your business interest expense. If you are
7

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Enter amounts paid for custom hire or machine work (the
machine operator furnished the equipment).

a dependent care assistance program, complete Form 2441,
Parts I and III, to figure your deductible contributions to that
program.

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If you use your vehicle for both business and personal
purposes and you claimed a deduction in 2025 on
CAUTION Schedule 1-A (Form 1040) for the vehicle loan interest
allocable to your personal use, then you can’t claim a deduction
for that same interest on Schedule F. See Schedule 1-A (Form
1040) and its instructions for more information.

!

Line 22

Enter the amounts you paid for farm labor. Don’t include
amounts paid to yourself. Reduce your deduction by the
amounts claimed on the following.
• Form 5884, Work Opportunity Credit.
• Form 8844, Empowerment Zone Employment Credit.
• Form 8932, Credit for Employer Differential Wage Payments.
• Form 8994, Employer Credit for Paid Family and Medical
Leave.
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.
If you provided taxable fringe benefits to your
employees, such as personal use of a car, don’t include
CAUTION in farm labor the amounts you depreciated or deducted
elsewhere.

!

Form 5500-SF. File this form electronically with the Department
of Labor (at efast.dol.gov) if you have a small plan (fewer than
100 participants in most cases) that meets certain requirements.
Form 5500. File this form electronically with the Department of
Labor (at efast.dol.gov) for a plan that doesn’t meet the
requirements for filing Form 5500-EZ or 5500-SF.
For details, see Pub. 560.

Lines 24a and 24b

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.

Line 25

Enter amounts you paid for repairs and maintenance of farm
buildings, machinery, and equipment that are not payments for
improvements to the property. Amounts are paid for
improvements if they are for betterments to your property or
restorations of your property (such as the replacements of major
components or substantial structural parts), or if they adapt your
property to a new or different use. See chapter 4 of Pub. 225 for
more information.
Don’t deduct repairs or maintenance on your home.
However, you may be able to elect to capitalize and
depreciate certain amounts paid for repair and maintenance of
tangible property to the extent you treat these amounts as capital
expenditures on your books and records regularly used in
figuring your income and expenses. For details, see chapter 8 of
Pub. 225.

Line 29

You can deduct the following taxes on this line.
• Real estate and personal property taxes on farm business
assets.
• Social security and Medicare taxes you paid to match what
you are required to withhold from farm employees’ wages.
• Federal unemployment tax.
• Federal highway use tax.
• Contributions to a state unemployment insurance fund or
disability benefit fund if they’re considered taxes under state law.
Don’t deduct the following taxes on this line.

• Federal income taxes, including your self-employment tax.

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 isn’t affected by
whether the plan qualified under the Internal Revenue Code, or
whether you claim a deduction for the current tax year. There is a
penalty for failure to timely file these forms. See U.S. Department
of Labor.

However, you can deduct one-half of self-employment tax on
Schedule 1 (Form 1040), line 15.
• Estate and gift taxes.
• Taxes assessed for improvements, such as paving and
sewers.
• Taxes on your home or personal-use property. You may be
able to deduct on line 32 expenses related to your home or
principle residence, such as property taxes, if you use your home
to conduct farming activities. See Business use of your home,
later.
• State and local sales taxes on property purchased for use in
your farming business. Instead, treat these taxes as part of the
cost of the property.
• Other taxes not related to your farming business.

Form 5500-EZ. 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).

Enter amounts you paid for gas, electricity, water, and other
utilities for business use on the farm. Don’t include personal

Line 23

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 Schedule 1 (Form 1040), line 16, not on
Schedule F (Form 1040).

8

Line 30

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required to limit your business interest expense, include only the
amount you are allowed to deduct on lines 21a and 21b. If you
are not required to limit your business interest expense and 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 2025 to banks or other financial institutions
for which you received a Form 1098 (or similar statement). If you
didn’t receive a Form 1098, enter the interest on line 21b.
If you paid more mortgage interest than is shown on Form
1098 (or similar statement), see chapter 4 of Pub. 225 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 (or
similar statement), 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 (or similar statement).
In the margin next to line 21b, enter “See attached.”
Don’t deduct interest you prepaid in 2025 for later years;
include only the part that applies to 2025.

TREASURY/IRS AND OMB USE ONLY DRAFT
utilities. You can’t 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.

Lines 32a Through 32f

Include all ordinary and necessary farm expenses not deducted
elsewhere on Schedule F (Form 1040), such as advertising,
office supplies, etc. Don’t include fines or penalties paid to a
government for violating any law. For details on business
expenses, see chapter 4 of Pub. 225.

At-risk loss deduction. Any loss from this activity that wasn’t
allowed last year because of the at-risk rules is treated as a
deduction allocable to this activity in 2025. See Form 6198 and
its instructions for more details.
Business startup costs. If your farming business began in
2025, you can elect to deduct up to $5,000 of certain business
startup costs. The $5,000 limit is reduced (but not below zero) by
the amount by which your startup costs exceed $50,000. Your
remaining startup 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 2025, you must complete and attach Form 4562.
Business use of your home. 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. Don’t use Form 8829.
De minimis safe harbor for tangible property. You may be
able to elect to use a de minimis safe harbor to deduct amounts
paid for certain tangible real or personal property used in your
farming business. If you elect the de minimis safe harbor for the
tax year, enter the total amounts you paid for property qualifying
under the de minimis safe harbor on line 32. Don’t include these
amounts on any other line. For details, see chapter 8 of Pub.
334.
Energy efficient commercial buildings deduction. You may
be able to deduct part or all of the expenses of modifying an
existing commercial building to make it energy efficient. For
details, see Form 7205 and its instructions.
Forestation and reforestation costs. 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 2025.
You can elect to amortize the remaining costs over 84
months. For amortization that begins in 2025, you must complete
and attach Form 4562.
The amortization election doesn’t apply to trusts, and the
expense election doesn’t apply to estates and trusts. For details
on reforestation expenses, see chapters 4 and 7 of Pub. 225.
Legal and professional fees. 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.
Tools. You can deduct the amount you paid for tools that have a
short life or cost a small amount, such as shovels and rakes.

!

Entertainment expenses related to your trade or
business are generally no longer deductible after 2017.

CAUTION

Preproductive period expenses. If you had preproductive
period expenses in 2025 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 producing property and
acquiring property for resale, earlier, and Uniform Capitalization
Rules in chapter 6 of Pub. 225.
Excess business loss limitation. Noncorporate taxpayers
may be subject to excess business loss limitations. The at-risk
limits and the passive activity limits are applied before
calculating the amount of any excess business loss. An excess
business loss is the amount by which the total deductions
attributable to all of your trades or businesses exceed your total
gross income and gains attributable to those trades or
businesses plus $313,000 (or $626,000 in the case of a joint
return). A trade or business includes, but is not limited to,
Schedule F (Form 1040) and Schedule C (Form 1040) activities,
an activity reported on Form 4835, and other business activities
reported on Schedule E (Form 1040).
Business gains and losses reported on Form 4797 and Form
8949 are included in the excess business loss calculation. This
includes farming losses from casualty losses or losses by reason
of disease or drought. Excess business losses that are
disallowed are treated as an NOL carryover to the following tax
year. See Form 461 and its instructions for details.

Line 33

If line 32f is a negative amount, subtract it from the total of lines
10 through 32e. Enter the result on line 33.

Line 34
Figuring your net profit or loss. If line 33 is more than line 9,
don’t enter your loss on line 34 until you have applied the at-risk
rules and the passive activity loss rules. To apply these rules,
follow the instructions for line 36 and the Instructions for Form
8582. After applying these rules, the amount on line 34 will be
your loss, and it may be smaller than the amount figured by
subtracting line 33 from line 9. You may also be required to file
Form 461, which limits the allowable loss. See Form 461 and its
instructions for more information.
If line 9 is more than line 33, and you don’t 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, don’t 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.
Partnerships. Subtract line 33 from line 9. If the amount is a
loss, the partners may need to apply the at-risk rules and the
passive activity loss rules to determine the amount of their loss
9

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Bad debts. See chapter 8 of Pub. 334.

Travel and meals. In most cases, you can deduct expenses for
farm business travel and 50% of your business meals. See the
instructions for Schedule C (Form 1040), lines 24a and 24b.

TREASURY/IRS AND OMB USE ONLY DRAFT
on line 34. A partner may also be required to file Form 461 to
limit any excess business loss. See Form 461 and its instructions
for more information.

Community income. 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.
Earned income credit. 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, line 27a, for details.
Conservation Reserve Program (CRP) payments. If you
received social security retirement or disability benefits in
addition to CRP payments, the CRP payments aren’t subject to
self-employment tax. You will deduct these payments from your
net farm profit or loss on Schedule SE (Form 1040), line 1b.
Don’t make any adjustment on Schedule F (Form 1040).

Line 35
Reserved for future use
Line 36
You don’t need to complete line 36 if line 9 is more than

TIP line 33.

At-risk rules. In most cases, if you have a loss from a farming
activity and amounts invested in the activity for which you aren’t
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 aren’t at risk, such as the following.
• Nonrecourse loans used to finance the activity, to acquire
property used in the activity, or to acquire the activity that aren’t
secured by your own property (other than property used in the
activity). However, there is an exception for certain nonrecourse
financing borrowed by you in connection with holding real
property.
• Cash, property, or borrowed amounts used in the activity (or
contributed to the activity, or used to acquire the activity) that are
protected against loss by a guarantee, stop-loss agreement, or
other similar arrangement (excluding casualty insurance and
insurance against tort liability).
10

Figuring your loss. Before determining your loss on line 34,
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.
All investment is at risk. 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 is your loss. The at-risk
rules and the passive activity loss rules don’t apply. See Line 34,
earlier, for how to report your loss.
But, if you checked the “No” box on line E, you may need to
complete Form 8582 to figure your loss to enter on Line 34. See
the Instructions for Form 8582.
Some investment isn’t at risk. If some investment isn’t 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 loss. The passive activity
loss rules don’t apply. See Line 34, earlier, for how to report your
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 (Form 1040)
loss to enter on line 34. After you figure the amount of your loss
under the at-risk rules, you may need to complete Form 8582 to
figure the amount of loss to enter on line 34. See the Instructions
for Form 8582 for details.

!

CAUTION

If you checked box 36b because some investment isn’t
at risk and you don’t attach Form 6198, the processing
of your return may be delayed.

At-risk loss deduction. Any loss from this activity not allowed
for 2025 only because of the at-risk rules is treated as a
deduction allocable to the activity in 2026.
More information. For details, see Pub. 925 and the
Instructions for Form 6198. Also, see Form 461 and its
instructions.
Note: Form 1040-SS filers, skip this line.

Part III. Farm Income—Accrual
Method

You may be required to use the accrual method of accounting. If
you use the accrual method, report farm income when it is due,
paid, earned, or taken into account as revenue in its applicable
financial statement, not when you receive it. In most cases, you
must include animals and crops in your inventory if you use this
method. See Pub. 225 for exceptions, inventory methods, how to
change methods of accounting, and rules that require certain
costs to be capitalized or included in inventory. For information
about accounting periods, see Pub. 538.

Chapter 11 bankruptcy. If you were a debtor in a chapter 11
bankruptcy case during 2025, see Chapter 11 Bankruptcy Cases
in the Instructions for Form 1040 (under Income) and the
Instructions for Schedule SE (Form 1040).

Lines 38a Through 40c

See the instructions for lines 3a through 5c, earlier.

DRAFT

DRAFT

Reporting your net profit or loss. Once you have figured your
net profit or loss, report it as follows. You must also consider any
excess business loss limitation. See Form 461 and its
instructions for more information.
Individuals. Enter your net profit or loss on line 34 and on
Schedule 1 (Form 1040), line 6 and; Schedule SE (Form 1040),
line 1a.
Nonresident aliens. Enter the net profit or loss on line 34
and on Schedule 1 (Form 1040), line 6. 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) or SSA.gov/
international/agreements for information on international social
security agreements.
Partnerships. Enter the net profit or loss on line 34 and on
Form 1065, line 5. The excess business loss rules are applied at
the partner level.
Trusts and estates. Enter the net profit or loss on line 34 and
on Form 1041, line 6.

• Amounts borrowed for use in the activity from a person who
has an interest in the activity, other than as a creditor, or who is
related under section 465(b)(3)(C) to a person (other than you)
having such an interest.

TREASURY/IRS AND OMB USE ONLY DRAFT
Line 43

DRAFT

DRAFT

See Line 8, earlier.

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