This massive act significantly overhauls the government regulation or farming and of farm subsidies.

Contributions of Real Property for Conservation Purposes

The existing deduction as laid out in the Pension Protection Act of 2006 was restored for farmers who donate real property for conservation. Farmers can now take a deduction up to 100 percent of their contribution base through 2009. This deduction originally expired at the end of 2007. Individuals can take a deduction of up to 50 percent of their contribution base.

Disabled Farmers

The IRS announced in 2006 that all payments made under the Conservation Reserve Program would be subject to self-employment tax including those payments made to disabled or retired farmers. The FARM Act effectively reverses this treatment. These payments to disabled and retired farmers will now be excluded from self-employment tax for federal and social security purposes.

Farm Losses

This provision redesigned the way losses may be treated. If you have sustained losses from farming please consult your accountant for advice as it applies to your individual situation.

Additional Incentives

Also included in the FARM Act are:

• Increased caps on agricultural bonds.
• The issuance of forestry conservation bonds.
• The treatment of specific farm-related like-kind exchanges have been enhanced.
• Enhanced depreciation for race horses.
• Tax relief for timber producers.