Reporting farm income and expenses To educate taxpayers about
their filing obligations, this fact sheet, the thirteenth in a
series, highlights some income sources and deductible business
expenses of farmers. Incorrect reporting of farm income and
expenses accounts for part of the estimated $345 billion per
year in unpaid taxes, according to IRS estimates. Farmers may
receive income from many sources, but the most common source is
the sale of livestock, produce, grains, and other products
raised or bought for resale. The entire amount a farmer
receives, including money and the fair market value of any
property or services, is reported on IRS Schedule F, Profit or
Loss From Farming. Bartering is another income source for
farmers. Bartering occurs when farm products are traded for
other farm products, property, someone else’s labor or personal
items. For example, if a farmer helps another farmer build a
barn and receives a cow for his work, the recipient of the cow
must report its fair market value as ordinary