Net Farm Income:

Primary Explanations for the Difference Between IRS and USDA Figures

GGD/RCED-93-113: Published: Jun 3, 1993. Publicly Released: Jul 28, 1993.

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Pursuant to a congressional request, GAO reviewed the differences between the net farm income figures reported by the Internal Revenue Service (IRS) and the Department of Agriculture (USDA).

GAO found that: (1) IRS and USDA use different populations for estimating net farm income; (2) USDA includes a number of specific noncash items that are excluded from IRS farm tax returns when compiling its net farm income figures; (3) IRS and USDA report some sales of livestock differently; (4) farm-related depreciation is a major expense item included in the calculation of net farm income; (5) while USDA measures the economic life and the contribution of farm-related assets to production, IRS follows definite tax rules that do not necessarily replicate the economic concept; (6) tax filers do not always comply with the Internal Revenue Code when reporting farm incomes and expenses; and (7) IRS and USDA net farm income figures do not represent the total income received by farmers or the financial condition of U.S. farms.

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