On December 17, 2018, the USDA announced that President Trump had authorized the second round of market facilitation program payments (MFP) to be made. The payment will be issued based upon the remaining 50 percent of total production, multiplied by the MFP rates for the commodity:
Anyone who has already submitted an MFP application, completed harvest, and certified their 2018 production does not have to do anything else. The second payment will simply issue. For producers who have not yet enrolled, the deadline is January 15, 2019, to apply for inclusion in the MFP program. Producers must file an application by this date, but they have until May 1, 2019, to certify 2018 production. More information and instructions for sign-up are available at www.farmers.gov/mfp. The government shutdown is complicating things, as FSA offices are not open to complete the certification process.Secretary Perdue is considering an extension of the January 15 deadline.
Because these payments are intended to compensate farmers for lost income stemming from depressed prices brought about by the trade war, they are includable in gross income. Because they constitute earnings derived from the producer’s trade or business, they are subject to self-employment tax, as well as federal income tax. To change this result, Congress would have to pass a law. Farmers who use the cash method of accounting will thus report these payments on their Schedule F for the tax year in which they receive them. There is no ability to defer taxation of a payment received in 2018.
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