View all text of Subpart C [§ 461 - § 470]
§ 464. Limitations on deductions for certain farming expenses
(a) General rule
(b) Certain poultry expenses
In the case of any taxpayer to whom subsection (d) applies—
(1) the cost of poultry (including egg-laying hens and baby chicks) purchased for use in a trade or business (or both for use in a trade or business and for sale) shall be capitalized and deducted ratably over the lesser of 12 months or their useful life in the trade or business, and
(2) the cost of poultry purchased for sale shall be deducted for the taxable year in which the poultry is sold or otherwise disposed of.
(c) Exception
(d) Certain persons prepaying 50 percent or more of certain farming expenses
(1) Taxpayer to whom subsection applies
This subsection applies to any taxpayer for any taxable year if such taxpayer—
(A) does not use an accrual method of accounting,
(B) has excess prepaid farm supplies for the taxable year, and
(C) is not a qualified farm-related taxpayer.
(2) Qualified farm-related taxpayer
(A) In general
For purposes of this subsection, the term “qualified farm-related taxpayer” means any farm-related taxpayer if—
(i)(I) the aggregate prepaid farm supplies for the 3 taxable years preceding the taxable year are less than 50 percent of,(II) the aggregate deductible farming expenses (other than prepaid farm supplies) for such 3 taxable years, or
(ii) the taxpayer has excess prepaid farm supplies for the taxable year by reason of any change in business operation directly attributable to extraordinary circumstances.
(B) Farm-related taxpayer
For purposes of this paragraph, the term “farm-related taxpayer” means any taxpayer—
(i) whose principal residence (within the meaning of section 121) is on a farm,
(ii) who has a principal occupation of farming, or
(iii) who is a member of the family (within the meaning of section 461(k)(2)(E)) of a taxpayer described in clause (i) or (ii).
(3) Definitions
For purposes of this subsection—
(A) Excess prepaid farm supplies
(B) Prepaid farm supplies
(C) Deductible farming expenses
(e) Farming
(Added Pub. L. 94–455, title II, § 207(a)(1), Oct. 4, 1976, 90 Stat. 1536; amended Pub. L. 95–600, title VII, § 701(l)(3), Nov. 6, 1978, 92 Stat. 2907; Pub. L. 97–354, § 5(a)(30), Oct. 19, 1982, 96 Stat. 1695; Pub. L. 99–514, title IV, § 404(a), (b)(1), title VIII, § 803(b)(8), Oct. 22, 1986, 100 Stat. 2223, 2224, 2356; Pub. L. 100–647, title I, § 1008(a)(4), Nov. 10, 1988, 102 Stat. 3437; Pub. L. 105–34, title III, § 312(d)(1), Aug. 5, 1997, 111 Stat. 839; Pub. L. 113–295, div. A, title II, § 221(a)(58)(A), (B)(i), (C), (D), Dec. 19, 2014, 128 Stat. 4047; Pub. L. 115–141, div. U, title IV, § 401(a)(118), (119), Mar. 23, 2018, 132 Stat. 1190.)