Enrolled Agent Exam [Part 2] 96, Farm Income Averaging — Schedule J

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Farm income averaging on Schedule J allows farmers to spread current year farm income over the three prior base years to reduce their tax bill. - This tax-saving strategy is available to individual farmers, partners, and S corporation shareholders, but not C corporations, trusts, or estates. - Qualifying income includes profits from farming activities and gains on the sale of farm assets, but excludes gains from selling farmland or cash rent. - The election is made on a timely filed return and is generally binding, meaning it cannot be easily revoked. - A common exam trap involves base years with negative taxable income, which must be treated as zero for the Schedule J calculation. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep