ABSTRACT
Farms pay tax just as other businesses do. Among the most important of these taxes is the federal income tax. Federal income taxation is important for all farm businesses, even those that are not currently profitable. Also important are the federal estate and gift taxes and myriad state and local taxes. This chapter makes the reader aware of the most important of these taxes and basic tax concepts. Cooperatives are businesses owned by farmers for the purpose of selling farm products and buying farm supplies. A tax credit is provided under the internal revenue code (IRC) for particular payment. Farms organized as limited liability companies (LLCs) are generally treated as pass-through entities. This means that the partnership or LLC files an information return with the internal revenue service (IRS), but each of the owners of the partnership or LLC reports gains and losses on his or her own individual tax returns.
