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constituting a single trade or business for the farmer.
Sec. 1.451-6(a)(2), Income Tax Regs.3
The referenced regulations and the above ruling would appear
to preclude prorating of the insurance proceeds which WJS-LLP and
3 Sec. 1.451-6(a)(2), Income Tax Regs., provides as follow:
§. 1.451-6. Election to include crop insurance
proceeds in gross income in the taxable year following
the taxable year of destruction or damage.--
* * * * * * *
(2) In the case of a taxpayer who receives insurance
proceeds as a result of the destruction of, or damage
to two or more specific crops, if such proceeds may,
under section 451(d) or this section, be included in
gross income for the taxable year following the taxable
year of such destruction or damage, and if such
taxpayer makes an election under section 451(d) and
this section with respect to any portion of such
proceeds, then such election will be deemed to cover
all of such proceeds which are attributable to crops
representing a single trade or business under section
446(d). A separate election must be made with respect
to insurance proceeds attributable to each crop which
represents a separate trade or business under section
446(d).
We note that this regulation does not help petitioners
(particularly WJS-Partnership, which does harvest each year more
than one crop and which does defer to the following year most of
its total income from all its crops), and petitioners do not rely
on it, because of the predicate in the regulation that it
pertains only to crop insurance proceeds received that first are
qualified for the sec. 451(d) deferral. Because, per our
holding, the crop insurance proceeds at issue do not qualify for
that deferral, the mandate of the regulation (that “all”
insurance proceeds received relating to a single trade or
business of a taxpayer be deferred until the following year) does
not apply.
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Last modified: March 27, 2008