ARCHIVED - Income of deceased persons - Farm crops

From: Canada Revenue Agency

What the "Archived Content" notice means for interpretation bulletins

NO: IT-234

DATE: July 21, 1975

SUBJECT: INCOME TAX ACT
Income of deceased persons - Farm crops

REFERENCE: Subsection 70(2) (also subsection 70(1))

1. A taxpayer who farms land that he owns or rents, or who rents land that he owns to a sharecropper, may have an interest in a crop that is sown but not harvested. Where a taxpayer dies having such an interest, the Department does not insist that any amount representing the value of the unharvested crop be included in computing his income, but such value may be so included if his executors so desire. However, except where paragraph 3 below applies, the ultimate proceeds of the whole crop are subject to tax in the group comprising the deceased, his estate and his beneficiaries.

2. In the event that the deceased's executors wish to include an amount representing the value of the unharvested crop in the income of the deceased, the following rules apply:

(a) in the case of a deceased taxpayer who farmed land that he owned or rented, the value of the deceased's interest in the crop at the time of his death is included in his income under subsection 70(2);

(b) in the case of a deceased taxpayer who rented land to a sharecropper, the value of the deceased's interest in the crop at the time of his death is included in his income under subsection 70(1); but if the deceased's executors wish to take advantage of the elective provisions, the Department considers that such value may be included under subsection 70(2).

Any amount so included in income reduces the amount to be included in the income of his estate or his beneficiaries when they receive the ultimate proceeds of disposition of the crop.

3. Farm land formerly owned by the deceased taxpayer may be sold after his death but before the crop is harvested. In that event, no amount in respect of the growing crop is included in income of the deceased or his estate or beneficiaries unless the agreement of sale or other instrument specifies the crop's selling price. Where land rented by the deceased is not retained under lease by his estate or beneficiaries until the crop is harvested, no amount for the crop is included in income of the group unless a payment in respect of the crop is received upon or after relinquishment of the lease. If the person who paid such specified price, or made such a payment on relinquishment of the lease, was the person who harvested the crop, he may deduct the amount in computing his income.

4. Regardless of how much of the value of the crop is subject to tax in the hands of the deceased taxpayer's estate or beneficiaries, they are not allowed, as deductions in computing their income, any seeding or other expenses incurred by and allowed to the deceased taxpayer.

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