Which entities cannot use farm income averaging?
Understand the Problem
The question is asking to identify which types of entities are restricted from utilizing farm income averaging, specifically in a tax context. We need to analyze the options given and determine which one is correct.
Answer
Multi-member LLCs as C-Corps, C-corporations, estates, and trusts.
Entities that cannot use farm income averaging include multi-member LLCs taxed as C-Corps, C-corporations, estates, and trusts.
Answer for screen readers
Entities that cannot use farm income averaging include multi-member LLCs taxed as C-Corps, C-corporations, estates, and trusts.
More Information
Farm income averaging is a tax provision that allows farmers to smooth out their income over a three-year period to potentially reduce their tax liability. However, not all entities engaged in farming can use this benefit.
Sources
- [PDF] Tax Management: Income Averaging - Farmers.gov - farmers.gov
- Chapter 7 * - extension.usu.edu
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