Page 296 - Individual Forms & Instructions Guide

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Additional Information duction is attributable to your farming or includes net capital gain. Net capital
fishing business; gain is the excess, if any, of net
See Pub. 225 and Regulations section
1.1301-1 for more information. • 2022 Form 1040, 1040-SR, or long-term capital gain over net
1040-NR, line 15, CCF reduction, ex- short-term capital loss.
cept to the extent that any earnings Line 2b. Enter on line 2b the portion of
Specific (without regard to the carryback of any your elected farm income on line 2a
net operating or net capital loss) from
treated as a net capital gain. The amount
Instructions the operation of agreement vessels in the you enter on line 2b can't exceed the
fisheries of the United States or in the smaller of your total net capital gain or
Line 2a foreign or domestic commerce of the the net capital gain attributable to your
United States aren't attributable to your
farming or fishing business.
Elected Farm Income fishing business; Line 2c. Enter on line 2c the smaller of
• Schedule C;
To figure your elected farm income, first • Schedule D; line 2b or the unrecaptured section 1250
gain attributable to your farming or fish-
figure your taxable income from farm- • Schedule E, Part II; ing business, if any.
ing or fishing. This includes all income, • Schedule F;
gains, losses, and deductions attributable • Form 4797; Line 4
to your farming or fishing business. If • Form 4835;
you conduct both farming and fishing • Form 8903, Domestic Production Figure the tax on the amount on line 3
businesses, you must figure your elected Activities Deduction, but only to the ex- using:
farm income by combining income, tent that deduction is attributable to your • The 2022 Tax Table, Tax Compu-
gains, losses, and deductions attributable farming or fishing business; and tation Worksheet, or Qualified Divi-
to your farming and fishing businesses. • Form 8949. dends and Capital Gain Tax Worksheet
from the 2022 Instructions for Form
Elected farm income also includes Your elected farm income is the 1040 or the 2022 Instructions for Form
any gain or loss from the sale or other amount of your taxable income from 1040-NR;
disposition of property regularly used in farming or fishing that you elect to in- • The 2022 Foreign Earned Income
your farming or fishing business for a clude on line 2a. Tax Worksheet from the 2022 Instruc-
substantial period of time. However, if You don't have to include all of tions for Form 1040; or
such gain or loss is realized after cessa- TIP your taxable income from farm­ • The Schedule D Tax Worksheet in
tion of the farming or fishing business, ing or fishing on line 2a. It may the 2022 Instructions for Schedule D.
the gain or loss is treated as attributable be to your advantage to include less
to a farming or fishing business only if than the entire amount, depending on Enter the tax on line 4.
the property is sold within a reasonable how the amount you include on line 2a
time after cessation of the farming or affects your tax bracket for the current Line 5
fishing business. A sale or other disposi- and prior 3 tax years.
tion within 1 year of the cessation is If you used Schedule J to figure your tax
considered to be within a reasonable The excess farm loss limitation rules for:
• 2021 (that is, you entered the
time. don't apply for tax years beginning after amount from the 2021 Schedule J,
2017 and before 2029. The excess farm
Elected farm income doesn't include line 23, on your 2021 Form 1040,
income, gain, or loss from the sale or loss limitation rules are suspended dur- 1040-SR, or Form 1040-NR, line 16; or
other disposition of land or from the sale ing those years and replaced by the ex- on your 2021 Form 1040-X, line 6), en-
of development rights, grazing rights, cess business loss limitation rules for tax ter on line 5 the amount from your 2021
and other similar rights. years beginning after 2020 and before Schedule J, line 11;
2029. The at-risk limits and the passive • 2020 but not 2021, enter on line 5
You should find your income, gains, activity limits are applied before calcu- the amount from your 2020 Schedule J,
losses, and deductions from farming or lating the amount of any excess business line 15; or
fishing reported on different tax forms, loss. The amount of any excess business • 2019 but not 2020 or 2021, enter
such as: loss allocable to your farming or fishing on line 5 the amount from your 2019
• 2022 Form 1040 or 1040-SR, or business(es) is not used in calculating Schedule J, line 3.
Form 1040-NR, line 1a, income from the amount of your elected farm income.
wages and other compensation you re- See generally the Instructions for Sched- If you figured your tax for 2019,
ceived (a) as a shareholder in an S cor- ule F (Form 1040) and Form 461. 2020, and 2021 without using Sched-
poration engaged in a farming or fishing Your elected farm income can't ex- ule J, enter on line 5 the taxable income
business, or (b) as a crew member on a ceed your taxable income. from your 2019 tax return (or as previ-
vessel engaged in a fishing business (but ously adjusted by the IRS, or corrected
see Fishing business, earlier); Lines 2b and 2c on an amended return). But if that
• 2022 Schedule 1 (Form 1040), amount is zero or less, complete the
line 15, deductible part of self-employ- Complete lines 2b and 2c if the amount 2019 Taxable Income Worksheet to fig-
ment tax, but only to the extent that de- of your elected farm income on line 2a ure the amount to enter on line 5.

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