If you’re forced to sell livestock due to a weather-related disaster such as drought, two tax provisions – 451(g) and 1033(e) – could help soften the blow. Here’s how they work. 

Deferring Income From Livestock Sales: How Does It Work?

This form ensures you report your cost of goods sold (COGS)—direct cost such as feed, seed, and supplies—properly, so you’re taxed only on your actual profits, not total sales.

Form 1125-A: How to Deduct COGS on Your Taxes

Before you change your overall accounting method or the way you treat any particular item—e.g. how you depreciate your assets or value your inventory—on your tax return, you’ll have to file Form 3115 first. Here’s how it works.

Form 3115: How to Change Your Accounting Method With the IRS

Track the changing value of your herd when full cost accounting and recordkeeping is impractical.

The Unit-Livestock-Price Method of Inventory Accounting

Since cost accounting for livestock and other farm commodities can be difficult, agricultural producers can also use the farm-price method to track their inventory. Here’s how it works.

What Is the Farm-Price Method of Inventory Accounting?

In a volatile marketplace, the lower of cost and market method can provide stability and consistency, but the nature of farm inventories can also sometimes make it impractical. 

The Lower of Cost and Market (LCM) Method of Inventory Accounting

Valuing inventories at cost helps you focus on true performance rather than short-term market price swings—but the recordkeeping involved can also be significant.

The Cost Method of Inventory Accounting: A Simple Guide

FMV helps you understand the value of your assets, and you’ll need to figure it when submitting an insurance claim, applying for a loan or filing your taxes. Here’s how it works.

What Is Fair Market Value (FMV) and How Does It Work?

Calculating COGS helps you price with clarity, understand profitability and make changes based on numbers, not instinct. 

Cost of Goods Sold (COGS): Definition, Formulas and Examples

Liquid assets like cash, receivables and inventory–also known as current assets–are the lifeblood of your business, funding ongoing activities and keeping the business moving.

Current Assets: Definitions, Calculations and Examples

Properly writing down your inventory is crucial, helping ensure its value is accurately reflected in your books while reducing taxable income. 

What Is an Inventory Write-Down, and How Does It Work?

A properly structured cropland lease puts expectations into writing, helping tenants expand their operation while protecting the tenant-owner relationship.

A Practical Guide to Cropland Leases

The hobby rules can be tricky to parse for ag producers, particularly if your operation is new and still getting off the ground. Here’s what you need to know. 

What Are the Hobby Loss Rules, and What Do They Mean for My Business?

You might get a 1099-R if you received payments from a retirement plan, pension, annuity or IRA. Here’s what you need to do if that happens.

IRS Form 1099-R: How to Report Pension and Retirement Income

The Clean Fuel Production Credit (45Z) recently got a big upgrade from the “One Big, Beautiful Bill” Act. Here’s what that means for agricultural producers, and what you can do to prepare. 

How Can Ag Producers Prepare for the 45z Tax Credit?

Maintaining detailed inventories for pesticides, herbicides, fungicides and other chemicals used on the farm can help improve yields, increase efficiency and satisfy important environmental recordkeeping requirements.

Chemical Inventory and Recordkeeping for Agricultural Producers

Smart fertilizer inventory management and recordkeeping can help maximize yields, protect ecosystems and ensure compliance with important environmental regulations.

A Producer’s Guide to Fertilizer Inventory and Recordkeeping

When it comes to structuring their business, many agricultural producers prefer to start simple, beginning as sole proprietors or entering partnerships. Here’s what that means for your operation. 

Sole Proprietorships and Partnerships: A Guide for Agricultural Producers

Keeping accurate seed inventory records can help your operation save money, improve yields and meet organic recordkeeping requirements.

Taking Care of Your Seeds: How to Manage a Seed Inventory

Sometimes you don’t have to make assumptions about your inventory costs. That’s where the specific identification method comes in. 

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