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Screen J - Schedule J - Farm Income Averaging (1040)
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Other income and/or adjustments to taxable farming and fishing business income
Enter other income considered taxable farming and fishing income, such as the Net operating loss attributable to farming or fishing included on Form 1040, Sch 1, line 8a. The amounts in this field increase or reduce the calculated total taxable income attributable to farming or fishing as shown on Schedule J Income Averaging Wrk 1.
Total current year taxable income attributable to farming/fishing
The optimal "Elected farm income" for Schedule J - Income Averaging for Farmers and Fishermen is determined by the taxable income attributable to farming and fishing. Elected farm income is limited to the lower of the taxable income or the taxable income attributable to farming/fishing. If any of the Elected farm income fields contain data, the calculated taxable income attributable to farming/fishing is not used.
The taxable income attributable to farming or fishing is calculated using information from other screens. The calculated amount in the following table appears on Schedule J Farm Income Averaging Worksheet 1.
Taxable Income from Farming/Fishing | UltraTax CS Data Entry |
|---|---|
Schedule F - Profit or Loss from Farming | F screen (all activities) |
Wages received as Shareholder of S corp involved in farming/fishing or as a fishing crew member | W2 screen with a Wage code of 3
|
Schedule C - Profit or Loss from Business | C screen with an activity code of 114110, Fishing
|
Form 4835 - Farm Rental Income and Expense | 4835 screen with the Considered farming business for income averaging field marked |
Schedule E, Part II - Income or Loss from Partnerships and S Corporations | K1-2 screen with the Farming activity and/or Fishing activity fields marked |
Ordinary and other income from Schedule J | J screen |
Qualified Business Income Deduction | Form 8995/8995-A related to farming or fishing activities |
Deductible portion of self-employment tax | Schedule SE for farming and fishing activities |
Deduction for Capital Construction Fund | OtherTax screen |
Net ordinary gain or loss from sale of farming business property | Farm and fishing assets sold, K1-2 screen field, and InstPY screen in the Personal Sale folder |
Short-term and Long-term capital gains | B&D screen indicated as farm, Sale screen, K1-2 screen fields, and InstPY screen in the Personal Sale folder |
note
- The taxable income attributable to farming and fishing calculates automatically. The calculated amount is used to optimize elected farm income for income averaging.
- Complete theElected farm incomefields to optimize income amounts that differ from the total taxable income attributable to farming/fishing.
- If any of theElected farm incomefields contain data, only theElected farm incomefields are used to complete Schedule J. If a field in that section is blank, it is treated as if it contains zero. When using theElected farm incomefields, enter data in all applicable fields even if the elected field is equivalent to the calculated Total taxable income attributable to farming/fishing amount.
Elected farm income
Enter the elected farm income amounts that differ from the calculated total taxable income attributable to farming/fishing. The application uses these amounts (instead of the calculated taxable income attributable to farming/fishing) to determine the portion that creates the lowest tax using Schedule J, Farm Income Averaging.
note
- Complete theElected farm incomefields to optimize income amounts that differ from the total taxable income attributable to farming/fishing.
- If any of theElected farm incomefields contain data, the application uses only theElected farm incomefields to complete Schedule J. If a field in the section is blank, it is treated as if it contains zero. When using theElected farm incomefields, enter data in all applicable fields even if the elected field is equivalent to theTotal current year taxable income attributable to farming/fishingfield.
Income averaging (Force)
Mark this field to use the amounts entered as elected farm income
in their entirety
to calculate Schedule J, Farm Income Averaging, and to not optimize the amounts.Force income averaging regardless of tax optimization
Enter
X
in this field to use the Schedule J tax calculation, regardless of the default tax optimization. Schedule J and related worksheet will print.Suppress printing and calculation of Schedule J
Enter
X
to suppress the printing and calculation of Schedule J and to calculate the income tax using one of the other methods.Prior Year Information section
Filing status
These amounts are required to calculate the current-year tax using Farm Income Averaging. Enter filing statuses for prior years if they are different from the current year. These fields default to the next following-year's filing status if the
Filing status
field is blank.Capital loss adjustment
Enter the capital loss adjustment
from the base year
if there is a loss on line 21 of the base year Schedule D forms. Line 2 of the Taxable Income Worksheets on Schedule J Worksheet 1 defaults to this amount. Enter this adjustment only if the taxable income for the base year is a negative amount.Net operating loss adjustment
For more information on this adjustment, see the Schedule J instructions. Line 2 of the Taxable Income Worksheets on Schedule J Worksheets 1 defaults to this amount. Enter this adjustment only if the taxable income for the base year is a negative amount.