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Procedures applicable to a taxpayer in a farming business regarding the application of § 263A of the Internal Revenue Code (Code)

21 Feb 2020 12:17 PM | Anonymous

Revenue Procedure 2020-13 provides procedures applicable to a taxpayer in a farming business regarding the application of § 263A of the Internal Revenue Code (Code).  Prior to the enactment of Public Law 115-97, 131 Stat. 2054 (December 22, 2017), commonly referred to as the Tax Cut and Jobs Act (TCJA), a taxpayer in a farming business could elect under § 263A(d)(3) to have § 263A not apply to certain plants produced by the taxpayer’s farming business.  Section 13102 of the TCJA added new § 263A(i) to the Code, which provides that § 263A does not apply to a taxpayer, other than a tax shelter (as defined in § 448(d)(3) of the Code), for a taxable year in which the taxpayer qualifies as a small business taxpayer by satisfying the gross receipts test in § 448(c) of the Code.  This revenue procedure provides the exclusive procedures for a taxpayer that qualifies for the § 263A(i) small business taxpayer exemption to revoke its prior election under § 263A(d)(3) and apply the exemption under § 263(i) in the same taxable year.  In addition, this revenue procedure provides the exclusive procedures for a taxpayer that qualified for and wishes to make an election under § 263A(d)(3) in the same taxable year that it no longer qualifies for the exemption under § 263A(i).

Revenue Procedure 2020-13 will be in IRB:  2020-11, dated March 9, 2020.

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