Entering commodity futures

Commodity Futures Income transactions involving commodity futures can be recorded as a commodity sale if:

• you reported the futures transaction as farming income (loss) for income tax purposes
• the transaction involves a primary agricultural product that you produced on your farm
• the transaction is considered a hedging strategy, not speculation

If your futures transactions meet this criteria, then report them as follows:

• For futures transactions reported as a gross amount, record the income as a commodity sale using the line code for the commodity. Record related purchases as a commodity purchase using the line code for the commodity.
• For futures transactions reported as a net amount, record the net gain as a commodity sale using the line code for the commodity. Record the net loss as a commodity purchase using the line code for the commodity.

Last updated on August 22, 2014 by FCC AgExpert