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TAX LAWS<br />
requirements are specific to<br />
participation in a “farming<br />
business,” defined as “the<br />
production, care, growing,<br />
harvesting, preservation,<br />
handling, or storage of crops<br />
or forest or fruit trees; the<br />
production, care, feeding,<br />
management, and housing of<br />
livestock; or horticulture, all<br />
intended for profit.”<br />
Rules for Surviving<br />
Spouses<br />
A surviving spouse of a<br />
deceased retired farmer may<br />
make a lifetime election on<br />
behalf of the deceased retired<br />
farmer that the retired farmer<br />
would have been eligible to<br />
make prior to death. It must<br />
be made by the due date,<br />
including extensions, for the<br />
tax year immediately following<br />
the tax year of the retired<br />
farmer’s death. No one was<br />
eligible to make an election<br />
prior to 2023.<br />
If a retired farmer made an<br />
election prior to death, the<br />
surviving spouse may exclude<br />
the qualifying income<br />
pursuant to the election made<br />
by the farmer.<br />
A surviving spouse cannot<br />
change an election the deceased<br />
retired farmer made.<br />
Any election made by the<br />
retired farmer prior to death<br />
is binding on all real property<br />
used in a farming business<br />
owned by the retired farmer<br />
at the time of death, but<br />
only as applied to the retired<br />
farmer and the surviving<br />
spouse.<br />
A surviving spouse may<br />
disclaim an election made<br />
by the retired farmer. If they<br />
make this disclaimer, the surviving<br />
spouse is not eligible<br />
to deduct qualifying income<br />
pursuant to an election made<br />
by the retired farmer prior to<br />
death.<br />
Because no elections were<br />
made during the 2023 calendar<br />
year, there will be no<br />
disclaimers filed for the 2023<br />
calendar tax year.<br />
Elections on 2023<br />
Returns<br />
When filing 2023 returns,<br />
retired farmers who rent real<br />
property or sold qualifying<br />
livestock or real property<br />
used in a farming business<br />
have to decide whether they<br />
want to make a single lifetime<br />
election to exclude the<br />
rental income or the capital<br />
gain. They may choose to<br />
make no election, reserving<br />
the right to do so in future<br />
years. If a retired farmer<br />
doesn’t make an election,<br />
they must include the capital<br />
gain or rental income in their<br />
2023 Iowa taxable income.<br />
Once a retired farmer<br />
makes an election, it can’t be<br />
changed. A retired farmer excluding<br />
farm rental income<br />
from Iowa taxation can’t<br />
ever take the Iowa capital<br />
gain deduction. Conversely,<br />
a retired farmer electing to<br />
exclude capital gain may not<br />
ever exclude income from a<br />
farm tenancy agreement.<br />
If either election is made,<br />
the retired farmer may not<br />
take the beginning farmer<br />
tax credit in the current or<br />
subsequent tax years. Retired<br />
farmers should discuss this<br />
election with a trusted tax<br />
professional. n<br />
eifarmer.com SPRING 2024 | EASTERN IOWA FARMER 33
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