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Farmers who pledge all or part of their production





More information must now be reported to the IRS about some farmers with CCC loans.

    A farming business that receives a CCC loan can use cash to repay the loan, purchase certificates for use in the repayment, or deliver the pledged collateral as full payment at maturity. If a farmer uses cash instead of certificates to repay the loan, the farmer and the IRS receive an Information Return (Form CCC-1099-G) showing the market gain realized.
    Under the Food, Conservation, and Energy Act of 2008, farmers using CCC certificates to facilitate repayment of loans will also receive 1099-G forms. Prior to January 1, 2007, this information was not reported to the IRS.

to secure a CCC loan can make a special election to treat the loan proceeds as income in the year received and obtain a basis in the commodity for the amount reported as income.

Farmers can make the special election by reporting the CCC loan proceeds on their tax returns for the year the loans are received. They must attach a statement to their returns showing the loan details.

Under the CCC loan program, the repayment amount for a loan secured by the pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment.

If the loan is repaid when the world price is lower, the difference between the lower repayment amount and the original loan amount is market gain.

The IRS has various rules that apply to market gain, depending on whether you take the special election, repay the loan with cash, or repay it with CCC certificates.

Contact our office and let us help you determine the best way to handle a CCC loan.


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In accordance with Internal Revenue Service Circular 230, we advise you that unless otherwise expressly stated, any discussion of a federal tax issue in this communication or in any attachment is not intended to be used, and it cannot be used, for the purpose of avoiding federal tax penalties.