Tax Law and News IRS Issues Tips on How Tax Reform Affects Farmers and Ranchers Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Intuit Accountants Team Modified Nov 27, 2018 2 min read The IRS has issued a tax tip focused on how many farmers and ranchers will benefit from tax law changes brought about by last year’s Tax Cuts and Jobs Act. Here are some of those changes along with details about how they will affect farmers and their bottom line: Net Operating Losses (NOLs) NOLs can now be carried forward indefinitely. Under prior law, they could only be carried forward 20 years. NOL deductions are limited to 80 percent of taxable income. They can be carried back for two years for farm and ranch businesses. Under prior law, NOLs could be carried back five years. Qualified Business Income Deduction For tax years beginning after Dec. 31, 2017, taxpayers other than corporations may be entitled to a deduction of up to 20 percent of their qualified business income from a qualified pass-through entity, but not from a C corporation, plus 20 percent of qualified real estate investment trust dividends and qualified publicly traded partnership income. The deduction is subject to multiple limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid with respect to the trade or business, and the unadjusted basis immediately after acquisition of qualified property held by the trade or business. The deduction can be taken in addition to the standard or itemized deductions. In some cases, patrons of horticultural or agricultural cooperatives may be required to reduce their deduction. The IRS will be issuing separate guidance for co-ops. Accounting Method Changes Under the new law, more farm corporations and partnerships can now use the cash basis of accounting for tax purposes. This includes small business taxpayers, such as farmers and ranchers with average annual gross receipts of $25 million or less in the prior three-year period. Farmers can refer to IRS guidance for more information about the process that eligible small business taxpayers may use to change accounting methods. Previous Post December 2018 Tax and Compliance Deadlines Next Post On the Record: Getting Your Clients’ Tax Data in Order Written by Intuit Accountants Team The Intuit® Accountants team provides ProConnect™ Tax, Lacerte® Tax, ProSeries® Tax, and add-on software and services to enable workflow for its customers. Visit us at https://proconnect.intuit.com, or follow us on Twitter @IntuitAccts. More from Intuit Accountants Team One response to “IRS Issues Tips on How Tax Reform Affects Farmers and Ranchers” Thanks for the information n Browse Related Articles Tax Law and News Farmers/ranchers hit by drought may qualify for relief Tax Law and News Net Operating Losses: Impact of the Tax Cuts and Jobs A… Tax Law and News 10 Key Tax Tips for Farmers and Ranchers Tax Law and News Tax Reform 101 for the Semi-Retired Tax Law and News IRS Waives Estimated Tax Penalty for Farmers and Fisher… Tax Law and News IRS Issues Guidance on TCJA Changes to Business Expense… Tax Law and News IRS Waives Underpayment and Underwithholding Penalty fo… Tax Law and News IRS Releases Draft of QBI Section of Publication 535 Tax Law and News How to take advantage of the Tax Cuts and Jobs Act Tax Law and News Tax Reform and Qualified Opportunity Zones