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Eligible farmer income test

To determine if your federal gross income from farming is at least  two-thirds of your excess federal gross income from all sources, you must complete the appropriate worksheet. See definitions for what farming includes.

If the decimal on the final line of your worksheet is less than 0.6667, then your gross income from farming is not two-thirds of your excess federal gross income.  However, if you are claiming the Investment tax credit or the Farmers' school tax credit, you may use the Three-year averaging method worksheet to determine eligibility. If that results in a decimal of less than 0.6667, you may not claim the credit.

Definitions

You are engaged in the business of farming if you cultivate, operate, or manage a farm for gain or profit, even though the operation may not produce a profit every year.

You are also engaged in the business of farming if you rent your farm property to another person who uses the property in agricultural production and the rental arrangement meets the conditions in either A or B:

A. The amount of the rental is a crop share (shared rental agreement). That is, the amount of rent is based upon the actual production of the land, whether paid to you in cash or in kind; or

B. You have an arrangement with your tenant for your participation in the farm business and you meet one of the following four tests:

  1. you do any three of the following:
    • pay or stand good for at least half of the direct costs of producing the crop,
    • furnish at least half of the tools, equipment, and livestock used in producing the crop,
    • consult with your tenant, or
    • inspect the production activities periodically;
  2. you regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise;
  3. you (or your employees) work 100 hours or more spread over a period of five weeks or more in activities connected with crop production; or
  4. you do things which, considered in their total effect, show that you are materially and significantly involved in the production of farm commodities.

Farming includes the operation or management of livestock, dairy, poultry, fish, fruit, fur-bearing animal, and vegetable (commonly referred to as truck) farms. Farming also includes the operation or management of plantations, ranches, ranges, and orchards.

For example, farming includes, but is not limited to, the raising or production of the following commodities:

  • field crops, including corn, wheat, oats, rye, barley, hay, potatoes, and dry beans;
  • fruits, including apples, peaches, grapes, cherries, and berries;
  • vegetables, whether raised conventionally or hydroponically, including tomatoes, snap beans, cabbage, carrots, beets, and onions;
  • horticultural specialties, including nursery stock, ornamental shrubs and trees, and flowers;
  • livestock and livestock products, including cattle, sheep, hogs, goats, horses, poultry, farmed deer, farmed buffalo, ostrich, emus, fur-bearing animals, milk, and eggs;
  • aquaculture products, including fish, fish products, water plants, and shellfish (provided the aquaculture products are grown and raised, not merely being harvested or caught); and
  • honey and beeswax produced from your own bees.

Except for Farm Donations to Food Pantries Credit, farming also includes:

  • production of maple syrup or cider, regardless of whether the income from these  operations is includable on federal Schedule C, Profit or Loss from Business, or Schedule F, Profit or Loss From Farming;
  • the sale of wine from a licensed farm winery, as provided in Alcoholic Beverage Control Law Article 6;
  • the commercial boarding of horses as defined in Agriculture and Markets Law § 301(13);
  • a managed Christmas tree operation whether dug for transplanting or cut from the stump; and
  • the sale of cider from a licensed farm cidery, as provided in Alcoholic Beverage Control Law § 58-c.

You are not engaged in the business of farming if:

  • your principal source of income is from providing agricultural services, such as soil preparation, veterinary services, or farm labor;
  • you manage or operate a farm for salary or a fee;
  • you are cultivating or operating a farm for recreation or leisure (such as a hobby farm); or
  • you do forestry and logging, unless the products are used in the operation of a farm or relate to an otherwise qualifying farm operation as described above and the income is reportable on federal Schedule F.
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