Fillable Pa Schedule F (Form Pa-40 F) - Farm Income And Expenses printable pdf download

PA-40 F (09–14)

Forward to PA Schedule F

PA Schedule F

PA DEPARTMENT OF REVENUE

Farm Income and Expenses

Overview

Form 4684. Report gain or loss from all business activity on PA

Schedule F. Include a casualty or theft loss (or gain, if insurance

Use PA Schedule F to report income or loss from a business you operate

proceeds exceed the basis of the property lost or taken) of business

as a farm. The following definitions may be helpful in determining if you

property on Line 11 of PA Schedule F. Reference the federal schedule as

should file a PA Schedule C or PA Schedule F:

the explanation for the gain or loss item, but do not submit the federal

Farming—The following activities, when engaged in as a regular busi-

schedule with your PA tax return.

ness:

Form 4835. Report rental income from farm production or crop shares

(i) Agriculture. The business of producing food products or other useful

whether or not you materially participate in the production of that

or valuable growths or crops by tilling and cultivating the soil, and by

income as rental income on PA Schedule E. Pennsylvania does not have

breeding, raising and feeding cattle, livestock, bees, poultry or other ani-

"materially participating" rules. An owner may deduct all losses in the

mals that produce a food product or are themselves a food product. For

taxable year realized. Only report on PA Schedule F the income,

example, the commercial raising of mushrooms is farming, but garden-

expenses and profit or loss from the operation of your farm enterprise.

ing and similar noncommercial activities are not farming. The following

are not included within the definition of agriculture:

Form 8824. Do not report like-kind exchanges on PA Schedule F.

Pennsylvania laws and regulations do not recognize like-kind exchanges.

(A) The breeding or raising of dogs, cats and other pets; or game

Report any gain or loss from any sale, exchange or disposition on Line

animals, birds, fish or other animals intended for use in sport-

11 of PA Schedule F, if the transaction was a normal business transac-

ing or recreational activities such as, but not limited to, hunt-

tion. Report any gain or loss from other dispositions (nonbusiness) on PA

ing, fishing, show competition and racing.

Schedule D.

(B) The operation of stockyards or slaughterhouses.

If you own or operate more than one farm or farming operation, you

(ii) Horticulture. The business of producing vegetables, vegetable plants,

must submit a separate PA Schedule F for each operation.

fruits and nursery stock, including the operation of commercial vegetable

greenhouses and nurseries. Horticulture does not include the business of

Other Pennsylvania and federal income tax differences.

servicing plants owned by other persons.

PA income from farming generally differs from the income determined

for federal income tax purposes. Further, Pennsylvania will no longer

(iii) Floriculture. The business of producing flowers and decorative or

accept a PA Schedule C-F Reconciliation for the purpose of adjusting the

shade trees, plants and shrubs in the field, nursery or greenhouse. The

federal farm income to PA farm income. Therefore, the items which were

raising of trees as timber or lumbering and logging or sawmill operations

previously included as additions to PA income or expenses on the PA

are not included in the definition of floriculture.

Schedule C-F Reconciliation should be included with the specific line of

(iv) Dairy farming. The business of breeding, feeding and raising cattle

income or expense on PA Schedule F. In addition, those items which

and other milk producing animals, and the production of feed for them

Pennsylvania does not require be reported as income or does not allow

by the owner of the animals. This doesn’t include operations such as pas-

as expense in determining net farm income, which are allowed in the

teurizing or homogenizing or the making of butter, cheese and ice cream.

determination of net federal farm income, should not be included in the

specific farm income or expenses on PA Schedule F.

These activities should be reported on PA Schedule C.

Examples of items that Pennsylvania requires as additions to income

(v) Fur-ranching. The propagation and raising of ranch raised fur-bear-

include: any advance receipts for goods or services; working capital

ing animals.

interest or dividend income including federal-exempt interest and

(vi) Propagation of game birds. The propagation of game birds for

dividend income from obligations of other states; gains from the sale of

commercial purposes by holders of propagation permits issued under 34

business assets where the property is replaced by similar property; gains

Pa.C.S. § § 101—2965 of the Game and Wildlife Code.

from involuntary conversions (such as those from IRC Section 1033);

and gains from the sale of property where PA basis is different than

(vii) Propagation of aquatic animals. The propagation of fish and other

federal basis.

aquatic animals for commercial use as a food or food product by holders

of propagation permits issued under 30 Pa.C.S. § § 101—7314 of the

Examples of items that Pennsylvania allows as additions to expenses that

Fish and Boat Code.

required a reduction for federal tax purposes include: a meals, travel and

entertainment expense deduction of 100 percent by Pennsylvania for the

For more information regarding the definition of a business, profession

expenses incurred; any differences in depreciation related to differences

or farm activity and for Pennsylvania’s requirements for reporting income

in basis of assets, amount of allowable Section 179 expense, or method

and expenses, visit

of depreciation for federal or PA purposes; and any other reductions in

NOTE: Pennsylvania determines income and loss under those

federal expenses allowed at 100 percent for PA personal income tax

accounting principles, systems and practices acceptable by standards of

purposes.

the accounting profession and consistent with the regulations of the

Examples of items that Pennsylvania requires as reductions in federal

department.

income or expenses include: income taxes based upon gross or net

Pennsylvania does not generally follow federal tax accounting rules to

income; any differences in depreciation related to differences in basis

determine income or loss. You may use any accounting method for PA

of assets, amount of allowable Section 179 expense, or method of

purposes, as long as you apply accounting methods consistently.

depreciation for federal or PA purposes; recognition of cancellation of

Pennsylvania does not allow Farm Income Averaging.

debt income; recognition of income from IRC Section 481(a) spread

adjustments; payments for owner pension, profit-sharing plans,

A farmer may deduct all losses in the taxable year realized. Report all

deferred, or welfare benefit plans; percentage depletion; direct expensing

transactions directly related to your farming operation on PA Schedule F.

of organizational expenses or syndication fees; losses from the sale of

You should maintain separate books and records for PA Personal Income

property where PA basis is different than federal basis; and any other

Tax (PIT) purposes. You may usually use your Federal Schedule F

income or expenses where there is a specialized federal treatment that

expenses for PA PIT purposes. However, you may not use federal

is not specifically addressed or allowed by PA personal income tax law

amounts if you made certain elections to accelerate or defer income

that might involve additional expensing, expensing verses capitalization,

and expenses or spread expenses over more than one taxable year. To

carry back or carry forward of losses, income recognition, or other

take advantage of the Pennsylvania reporting differences that decrease

special treatments.

your federal profit, complete PA Schedule F.

Specific Instructions

The Federal Schedule F instructions for the following federal schedules

A. Agricultural Activity Code. Enter the four-digit code that best

do not apply:

describes your principal income producing activity. If your principal

Schedule SE. Do not report self-employment taxes to Pennsylvania.

source of income is from providing agricultural services such as soil

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Pa Schedule F (Form Pa-40 F) - Farm Income And Expenses

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