In what year and on which tax form would Jose Sanchez, a cash-basis farmer, repo

Question

In what year and on which tax form would Jose Sanchez, a cash-basis farmer, report the $3,890 expenses of raising 15 feeder calves paid in 2012 and report the $12,600 proceeds from the 2014 sale of the calves?

A)$3,890 cost as basis of livestock sold and $12,600 as sales proceeds on 2014 Form 4797, Part II.

B)$3,890 cost as basis of livestock sold and $12,600 as sales proceeds on 2014 Schedule F.

C)$3,890 as expense on 2012 Schedule F, and $12,600 as sales proceeds on 2014 Schedule F.

D)$3,890 cost as expense on 2014 Schedule F, and $12,600 as sales proceeds on 2014 Schedule F.

Explanation / Answer

Answer is option (B) $3,890 cost as basis of livestock sold and $12,600 as sales proceeds on 2014 Schedule F.

Explanation:

Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. This includes money and the fair market value of any property or services you receive. When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). See chapter 6 for information on the basis of assets. You generally report these amounts on Schedule F for the year you receive payment.

Source: https://www.irs.gov

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