26 U.S. Code § 464 - Limitations on deductions for certain farming
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).
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.
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).
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).
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.
 See References in Text note below.
Subsection (c), referred to in subsec. (d)(2)(B)(iii), which defined “farming syndicate”, was transferred to section 461 of this title and redesignated as subsec. (j) by Pub. L. 113–295, div. A, title II, § 221(a)(58)(B)(i), Dec. 19, 2014, 128 Stat. 4047.
2014—Subsecs. (a), (b). Pub. L. 113–295, § 221(a)(58)(A), 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).
Subsec. (d). Pub. L. 113–295, § 221(a)(58)(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).
Subsec. (e). Pub. L. 113–295, § 221(a)(58)(C), added subsec. (e) and struck out former subsec. (e) which defined the terms “farming” and “limited entrepreneur” for purposes of this section.
Subsec. (f). Pub. L. 113–295, § 221(a)(58)(C)(i), redesignated subsec. (f) as (d).
Subsec. (g). Pub. L. 113–295, § 221(a)(58)(C)(i), 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 December 31, 1986.”
1997—Subsec. (f)(3)(B)(i). Pub. L. 105–34 substituted “section 121” for “section 1034”.
1988—Subsec. (g). Pub. L. 100–647 added subsec. (g).
1986—Pub. L. 99–514, § 404(b)(1), substituted “for certain farming” for “in case of farming syndicates” in section catchline.
Subsec. (d). Pub. L. 99–514, § 803(b)(8), 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.”
Subsec. (f). Pub. L. 99–514, § 404(a), added subsec. (f).
1982—Subsec. (c)(1)(A), (B). Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”.
1978—Subsec. (c)(2). Pub. L. 95–600 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).
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
If any interest costs incurred after Dec. 31, 1986, are attributable to costs incurred before Jan. 1, 1987, the amendment by section 803(b)(8) of Pub. L. 99–514 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 section 803 of Pub. L. 99–514) or, if applicable, section 266 of such Code, see section 7831(d)(2) of Pub. L. 101–239, set out as an Effective Date note under section 263A of this title.
Amendment by section 803(b)(8) of Pub. L. 99–514 applicable to costs incurred after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 803(d) of Pub. L. 99–514, set out as an Effective Date note under section 263A of this title.
Amendment by Pub. L. 95–600 effective as if included in this section or section 447 of this title at the time of their enactment, Oct. 4, 1976, see section 701(l)(4) of Pub. L. 95–600, set out as a note under section 447 of this title.
Written determinations for this section
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- Farming Syndicate : 2008-10-03
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