1). Which of the statements below, regarding the tax reporting requirements applicable to Commodity Credit Corporation (CCC)...
Question:
1). Which of the statements below, regarding the tax reporting requirements applicable to Commodity Credit Corporation (CCC) loans, is NOT correct?
a). A farmer can elect each year whether or not to report loan proceeds when received.
b). A farmer can request income tax withholding from CCC loan payments received.
c). A CCC loan amount is normally taxable in the year the pledged commodity is sold.
d). A farmer can elect to report the loan amount in the year the proceeds are received.
2). Jim Jeffers, a cash-basis farmer, paid $2,100 for fertilizer and lime expenses, the effects of which will last about three years. He received $1,200 for fertilizer from the USDA. His total expense for fertilizer, feed, seed, and similar items for the current year and each of the past three years has been 40% of his total farming expense. Which of the following is correct with respect to actions Jim may take?
a). Deduct the fertilizer and lime expense in the year the expense was paid.
b). Capitalize the fertilizer and lime expense, and depreciate over a five-year recovery period.
c). Deduct the expense only in the year the fertilizer and lime are applied to the soil.
d). Deduct $900 [$2,100 expense – $1,200 USDA payment for fertilizer] in the year paid.
Finite Mathematics and Its Applications
ISBN: 978-0134768632
12th edition
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair