General rule
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).
Certain poultry expenses
Exception
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.
Certain persons prepaying 50 percent or more of certain farming expenses
Taxpayer to whom subsection applies
Qualified farm-related taxpayer
In general
Farm-related taxpayer
Definitions
Excess prepaid farm supplies
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).
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).
Deductible farming expenses
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.
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.
Pub. L. 94–455, title II, § 207(a)(1)90 Stat. 1536Pub. L. 95–600, title VII, § 701l92 Stat. 2907Pub. L. 97–354, § 5(a)(30)96 Stat. 1695Pub. L. 99–514, title IV, § 404(a)100 Stat. 2223Pub. L. 100–647, title I, § 1008(a)(4)102 Stat. 3437Pub. L. 105–34, title III, § 312(d)(1)111 Stat. 839Pub. L. 113–295, div. A, title II, § 221(a)(58)(A)128 Stat. 4047Pub. L. 115–141, div. U, title IV, § 401(a)(118)132 Stat. 1190(Added , , ; amended ()(3), , ; , , ; , (b)(1), title VIII, § 803(b)(8), , , 2224, 2356; , , ; , , ; , (B)(i), (C), (D), , ; , (119), , .)
Editorial Notes
Amendments
Pub. L. 115–141, § 401(a)(118)2018—, inserted “expenses” after “farming” in section catchline.
Pub. L. 115–141, § 401(a)(119)Subsec. (d)(2)(B)(iii). , substituted “section 461(k)(2)(E)” for “subsection (c)(2)(E)”.
Pub. L. 113–295, § 221(a)(58)(A)2014—Subsecs. (a), (b). , substituted “any taxpayer to whom subsection (d) applies” for “any farming syndicate (as defined in subsection (c))” in subsec. (a) and in introductory provisions of subsec. (b).
Pub. L. 113–295, § 221(a)(58)(C)(i)section 461 of this titleSubsec. (c). , redesignated subsec. (d) as (c). Former subsec. (c) transferred to .
Pub. L. 113–295, § 221(a)(58)(B)(i)section 461 of this title, transferred subsec. (c) defining the term “farming syndicate” to and redesignated it as subsec. (j) of that section.
Pub. L. 113–295, § 221(a)(58)(D)Subsec. (d). , struck out “Subsections (a) and (b) to apply to” before “Certain persons” in heading, redesignated pars. (2) to (4) as (1) to (3), respectively, and struck out former par. (1). Prior to amendment, text of par. (1) read as follows: “In the case of a taxpayer to whom this subsection applies, subsections (a) and (b) shall apply to the excess prepaid farm supplies of such taxpayer in the same manner as if such taxpayer were a farming syndicate.”
Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec. (f) as (d). Former subsec. (d) redesignated (c).
Pub. L. 113–295, § 221(a)(58)(C)Subsec. (e). , added subsec. (e) and struck out former subsec. (e) which defined the terms “farming” and “limited entrepreneur” for purposes of this section.
Pub. L. 113–295, § 221(a)(58)(C)(i)Subsec. (f). , redesignated subsec. (f) as (d).
Pub. L. 113–295, § 221(a)(58)(C)(i)Subsec. (g). , struck out subsec. (g). Text read as follows: “Except as provided in subsection (f), subsections (a) and (b) shall not apply to any taxable year beginning after .”
Pub. L. 105–341997—Subsec. (f)(3)(B)(i). substituted “section 121” for “section 1034”.
Pub. L. 100–6471988—Subsec. (g). added subsec. (g).
Pub. L. 99–514, § 404(b)(1)1986—, substituted “for certain farming” for “in case of farming syndicates” in section catchline.
Pub. L. 99–514, § 803(b)(8)Subsec. (d). , substituted “Exception” for “Exceptions” as heading and amended text generally. Prior to amendment, text read as follows: “Subsection (a) shall not apply to—
“(1) any amount paid for supplies which are on hand at the close of the taxable year on account of fire, storm, flood, or other casualty or on account of disease or drought, or
“(2) any amount required to be charged to capital account under section 278.”
Pub. L. 99–514, § 404(a)Subsec. (f). , added subsec. (f).
Pub. L. 97–3541982—Subsec. (c)(1)(A), (B). substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”.
Pub. L. 95–6001978—Subsec. (c)(2). substituted in subpar. (E) “(or a spouse of any such member)” for “(within the meaning of section 267(c)(4))” and provided that for purposes of subpar. (E) the term “family” has the meaning given to such term by section 267(c)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Pub. L. 113–295section 221(b) of Pub. L. 113–295section 1 of this titleAmendment by effective , subject to a savings provision, see , set out as a note under .
Effective Date of 1997 Amendment
Pub. L. 105–34section 312(d) of Pub. L. 105–34section 121 of this titleAmendment by applicable to sales and exchanges after , with certain exceptions, see , set out as a note under .
Effective Date of 1988 Amendment
Pub. L. 100–647Pub. L. 99–514section 1019(a) of Pub. L. 100–647section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
Effective Date of 1986 Amendment
section 803(b)(8) of Pub. L. 99–514section 803 of Pub. L. 99–514section 7831(d)(2) of Pub. L. 101–239section 263A of this titleIf any interest costs incurred after , are attributable to costs incurred before , the amendment by is applicable to such interest costs only to the extent such interest costs are attributable to costs which were required to be capitalized under section 263 of the Internal Revenue Code of 1954 and which would have been taken into account in applying section 189 of the Internal Revenue Code of 1954 (as in effect before its repeal by ) or, if applicable, section 266 of such Code, see , set out as an Effective Date note under .
Pub. L. 99–514, title IV, § 404(c)100 Stat. 2224
section 803(b)(8) of Pub. L. 99–514section 803(d) of Pub. L. 99–514section 263A of this titleAmendment by applicable to costs incurred after , in taxable years ending after such date, except as otherwise provided, see , set out as an Effective Date note under .
Effective Date of 1982 Amendment
Pub. L. 97–354section 6(a) of Pub. L. 97–354section 1361 of this titleAmendment by applicable to taxable years beginning after , see , set out as an Effective Date note under .
Effective Date of 1978 Amendment
Pub. L. 95–600section 447 of this titlelPub. L. 95–600section 447 of this titleAmendment by effective as if included in this section or at the time of their enactment, , see section 701()(4) of , set out as a note under .
Effective Date
Pub. L. 94–455, title II, § 207(a)(3)90 Stat. 1537