FLEP grant income, expenses & income taxes

The FLEP grant claim we filed last year resulted in a co-payment check to cover half our expenses -- and an IRS form 1099, which meant we had to pay income taxes on it.

                                                                

We talked through the options with our CPA, and filed a Schedule F, "Profit and Loss from Farming," using code 11300, "Forestry and logging."

 

The income went on line 10, "Other income," and we decided the expenses should go on line 15, "Custom hire machine work," since it was hired work involving chain saws.

 

By definition of the FLEP cost-sharing agreement, the expenses outweighed the income by a factor of 2, so we reported a net farming loss, which got us a larger refund.