IRS initiates program for auditing farmers’ tax returns

The IRS’s Small Business / Self-Employed Division (SB/SE) has issued a memo that details a pilot program for auditing expenses farmers claim on Form 1040, Schedule F, “Profit or Loss From Farming.” Schedule F is used to report farm income and expenditures. The memo instructs auditors to focus on expenses including deposits, prepaid supplies, equipment rentals or leases and fuel.