Some Answers on ERP Phase 2

It appears that we are starting to get some answers on Allowable Gross Revenue for purposes of ERP Phase 2.

We had a question on how to report crop insurance proceeds that a farmer has elected to defer to the following year. We have received an answer and the farmer should report that income in the year it is received which may be different from the year it is reported.

This applies even for insurance such as margin insurance that is not collected until after the crop year. For example, if you obtained margin insurance on your 2020 corn crop, that indemnity is not calculated until 2021 and likely received in 2021. You would report that income in 2021 not 2020.

You may receive crop insurance proceeds in 2020 related to the 2020 crop. You elect to report those proceeds in 2021. For purposes of AGR, you report those proceeds in 2020, the year you collect them.

Similar provisions apply to deferral of livestock sales due to drought or other weather conditions. You will report this income as part of AGR in the year of sale, not necessarily the year it is reported on your tax return.

As an example, Sara had sales of livestock due to drought and received $100,000 of sales in 2020 that she elected to defer to 2021. She will report the $100,000 of sales in 22020 as part of her AGR calculations.

However, it appears that if you deferred raised breeding stock that is reported on Form 4797 that income is excluded from AGR at least based on the Fact Sheet. However, PARP allows the sales of raised breeding stock to be included. Therefore, we are not totally sure on this conclusion for now.