P2-U16 Agricultural Enterprises · EA Study Lesson

Q1.How is qualifying farm property expected to last more than one year generally recovered?

Its entire cost generally is not deducted in the acquisition year; it is recovered over time

Q2.William is a qualified farmer that files on Schedule F. All of his income is from farming activities. He expects to owe $5,900 in estimated taxes for the year. William wants to file an extension and file his return as late as possible, on October 15. By which date must he make his required annual payment, in order to avoid an estimated tax penalty? A. April 15 B. October 15 (as long as he files a valid extension) C. January 15 D. March 1

January 15

Q3.Tripp is a self-employed sheep farmer who files on Schedule F. On September 12, 2025, his farm was damaged and many of his livestock were killed by a hurricane. His farm was located in a Federally Declared Disaster Area. Tripp applied for disaster assistance and filed for insurance reimbursement to replace his livestock and repair his farm. He receives an insurance reimbursement on December 15, 2025, but he doesn’t purchase replacement livestock right away. What is the replacement period for the sale or exchange of livestock in an area eligible for federal disaster assistance? A. Two years after the close of the first tax year in which the taxpayer realizes any part of his gain from the sale or exchange of livestock B. One year after the close of the first tax year in which the taxpayer realizes any part of his gain from the sale or exchange of livestock C. Four years after the close of the first tax year in which the taxpayer realizes any part of his gain from the sale or exchange of livestock D. Three years after the close of the first tax year in which the taxpayer realizes any part of his gain from the sale or exchange of livestock

Four years after the close of the first tax year in which the taxpayer realizes any part of his gain from the sale or exchange of livestock

Q4.Gary owns a 50-acre parcel of farmland that he rents for $3,200 a month to another farmer. What form should Gary use to report his rental income if he rents his farmland for a flat cash amount without providing services to the tenant? A. Schedule C B. Form 4835 C. Schedule E D. Schedule F

Schedule E

Q5.Opie is a farmer who grows asparagus. All his income is from farming and he files Schedule F. Opie did not make any estimated tax payments throughout the year. What is the latest date that Opie can file his 2025 tax return and pay all the tax owed, and still avoid a penalty? A. April 15, 2026 B. March 15, 2026 C. January 15, 2026 D. March 2, 2026

March 2, 2026

Q6.Ronald owns a timber farm which he operates himself. What form must he use to report the activity from his timber farming business? A. Schedule F B. Schedule C C. Schedule SE D. Schedule E

Schedule F

Q7.Bobby owns a dairy farm. His business is organized as a single-member LLC. He has not filed an election to be treated as a corporation. What form should he use to report his business' earnings? A. Schedule F B. Schedule C C. Schedule E D. Schedule J

Schedule F

Q8.In some instances, qualified farmers can elect to postpone reporting gain from a forced sale of livestock due to weather-related conditions. Which of the following is required in order for a farmer to postpone gain due to weather conditions? A. The sale must occur solely because the weather-related condition affected the water, grazing, or other requirements of the livestock. B. The livestock cannot be held as inventory. C. The livestock must be sold at a higher price than usual. D. The livestock must be sold within the same tax year they were purchased or raised.

The sale must occur solely because the weather-related condition affected the water, grazing, or other requirements of the livestock.

Q9.Lorn is a farmer who grows alfalfa. His farm has $45,000 in profits for the year, and he will file Schedule F. Lorn did not make any estimated tax payments during the year. Lorn cannot file his tax return by March 1st, because his accountant is too busy to file Lorn's return by that date. He estimates that he will be able to file his return around April 10th. What is the latest date that Lorn can pay his 2025 estimated tax, and still avoid an estimated tax penalty? A. April 15, 2026 B. January 15, 2026 C. March 15, 2026 D. April 1, 2026

January 15, 2026