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WJS-Partnership, and petitioners reported 65 percent of the
income relating to the current year’s sugar beet crops in the
current year and only 35 percent thereof in the following year.
Accordingly, on the basis of the above-stated rationale for the
section 451(d) deferral of insurance proceeds, it would make more
sense for WJS-LLP and WJS-Partnership to be required to report
the insurance proceeds they received in 2001 in the year in which
most (namely, 65 percent) of the income from the crops would have
been reported had the crops not been damaged (i.e., 2001).
In Rev. Rul. 74-145, 1974-1 C.B. 113, respondent concluded
that the deferral of recognition of crop insurance proceeds under
section 451(d) was available to a farmer who, under his normal
method of accounting for crop income, deferred to the following
year not all but more than 50 percent of his crop income, a
percentage which in the ruling respondent referred to as a
“substantial portion” of the farmer’s annual crop income.
Also, the above revenue ruling concluded, consistently with
section 1.451-6(a)(2), Income Tax Regs., that a farmer who
receives in the current year crop insurance proceeds (that would
qualify for deferral under section 451(d)) relating to two or
more damaged crops, but who makes a section 451(d) deferral
election with respect to only a “portion” of the insurance
proceeds received, must defer and report in the following year
all of the insurance proceeds attributable to the crops
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Last modified: March 27, 2008