IRS Finally Updates RP Crop Insurance Deferral Options
August 16, 2022
For several years the IRS in the Farmers Tax Guide had indicated that farmers could not elect to defer crop insurance proceeds to the following year for revenue protection policies. The IRS has finally caught up with the times and has updated their publication. The wording on this is found on page 12 of IRS Publication 225. It reads:“Proceeds received from revenue insurance policies may be the result of either yield loss due to physical damage or to decline in price from planting to harvest. For these policies, only the amount of the proceeds received as a result of yield loss can be deferred. Proceeds received from weather insurance policies cannot be deferred if the payment is based on rainfall amounts and is not a result of physical damage to a crop.”Most farmers have elected to defer the yield portion of revenue protection crop policies for the last few years so this is great news. Not that the language doesn’t indicate that the decline in price from planting to harvest cannot be deferred. Typically the crop insurance company will calculate this for you.Farmers still must meet the normal crop insurance election requirements to defer the yield portion.