Rural Practice Digest, Vol. 1, Issue 11

Tax Treatment of Involuntary Conversions; Case and Ruling Annotations; Summer Seminars

In this issue of the Rural Practice Digest I address the proper tax reporting of involuntary conversions. This is an issue that farmers, ranchers and other rural landowners sometimes face, whether as a result of a government condemnation, or (for livestock) a weather-related event. Such a transaction raises questions about how much gain can be deferred, and where any taxable gain is to be reported on the return. I also address the procedural rules concerning the election to treat a transaction as an involuntary conversion based on the type of property involved, and whether the election to defer can be made by a decedent’s estate.

In the Annotations section, I provide updates on what is happening in the courts and the IRS that are relevant to agricultural producers, agribusinesses and rural landowners.

Some highlights include:

The most recent court development on price-fixing litigation in the broiler chicken industry

FIFRA and preemption of state-based claims

Chemical drift

LLCs and Partnerships, including the removal of the partnership basis shifting regulations

K-1 Reporting of a negative amount for “trading activity”

Tax reporting of IRA contributions and the Saver’s Credit

A recent court opinion involving a marijuana business

Proper handling of theft losses

Insurance policy interpretation

Proper reporting of disability payments

Also, on the last page is information about the summer tax seminars that Paul Neiffer and I are doing together. We will be in Santa Fe, New Mexico, on June 5-6 and Lancaster, PA, on August 4-5. The Santa Fe event will also be online. Lancaster is in-person only.

The next edition will be published in late May.