Remember that FSA-510 is Based on Net Farm Income Not Gross Farm Income
We continue to get several questions on this issue
Reader Question: “On the FSA-510, do I look at my gross farm income or my net? My Schedule F gross is over $1.5 million, so I assumed I easily clear the 75% test.”
This is one of the most common questions we are getting right now, and it’s easy to see why. With the $900,000 average AGI cap back in the spotlight, a lot of farmers are looking at the 75% farm-income exception for the first time and the natural instinct is to glance at that big gross number on top of the Schedule F and assume you’re well clear of the threshold. After all, if you’re selling well over a million dollars of grain or cattle and only have a little off-farm income, how could farming not be 75% of your income?
The answer trips up more operations than you’d think, so let’s walk through it.
Short version: it’s net, not gross and that assumption above is the trap.
The FSA-510 (and Handbook 6-PL behind it) doesn’t run the 75% test on gross receipts. It uses adjusted gross income — farm income after expenses, which the handbook calls “comparable to the net income from farming.” On a Schedule F, that’s line 34 (net farm profit or loss), not line 9 (gross income).
A worked example:
