Updated November 7, 2026. Quick answer: Lines 1a to 1c report livestock and other items you bought for resale, net of their cost, and line 2 reports what you raised yourself. Under the cash method both are counted when you actually or constructively receive them, and goods or property count at fair market value. Crop-share rents from a farm you materially run go on line 2 too.
What lines 1a to 2 ask
| Line | What it asks |
|---|---|
| 1a | “Sales of purchased livestock and other resale items” |
| 1b | “Cost or other basis of purchased livestock or other items reported on line 1a” |
| 1c | “Subtract line 1b from line 1a” |
| 2 | “Sales of livestock, produce, grains, and other products you raised” |
When income counts
The Instructions open Part I with the cash-method rule: “In Part I, show income received for items listed on lines 1 through 8. In most cases, include both the cash actually or constructively received and the fair market value (FMV) of goods or other property received for these items.” Constructive receipt has a plain definition: “Income is constructively received when it’s credited to your account or set aside for you to use.”
Card and platform payments count as receipts too. The Instructions say “you should consider the amounts shown on Form 1099-K” along with all other amounts received when calculating gross receipts. The 1099-K box page is Form 1099-K box 1a.
Crop shares, pasture and rent
Crop-share rents are the usual confusion. Line 2 is correct if you farm it: “If you received rents based on crop shares or farm production and materially participated in the management or operation of a farm, report these rents as income on line 2.” If you did not materially participate, the rent belongs on Form 4835, covered on Form 4835.
Pasture income splits two ways. A flat charge is rental income on Schedule E, but the Instructions say to “report pasture income received from taking care of someone else’s livestock on Schedule F (Form 1040), line 8.” That line is covered on lines 6 to 9.
Weather-related livestock sales
A forced sale can be deferred one year. The election applies when you “sold livestock because of drought, flood, or other weather-related conditions” and all three conditions hold: “Your main business is farming.” “You can show that you sold the livestock only because of weather-related conditions.” “Your area qualified for federal aid.”
Example with invented numbers
Illustration, not an IRS example; every result is computed from invented inputs. An invented farm sold $9,800 of purchased feeder calves at a cost of $5,600, and sold $61,300 of grain and hay it raised.
| Line | Entry | Amount |
|---|---|---|
| 1a | Sales of purchased livestock and other resale items (invented input for the computed lines) | $9,800 |
| 1b | Cost or other basis of those items (invented input for the computed lines) | $5,600 |
| 1c | Subtract line 1b from line 1a (computed) | $4,200 |
| 2 | Sales of livestock, produce, grains and other products you raised (invented input for the computed lines) | $61,300 |
Line 1c carries the net resale margin of $4,200 to the gross income total; the $61,300 on line 2 goes in whole. The rest of this farm is built on the next pages.
Edition
This page reads Schedule F (Form 1040) for 2025 and the Instructions for Schedule F (Form 1040) (2025), the files irs.gov served on 2026-11-07. Line numbers belong to that edition, so check the label printed on the schedule in your own copy before you follow a line reference.
Common mistakes
- Putting the full resale sales on line 1c. Line 1c is the sales less their cost, and the cost goes on line 1b.
- Reporting only checks received. Goods or property received for these items count at fair market value.
- Reporting crop-share rent on line 2 when you did not materially participate; that rent belongs on Form 4835.
- Counting a payment-card deposit twice, once as a Form 1099-K amount and once as the same sale.
Related: Schedule F overview, Form 4835, and Schedule C line 1.
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- Schedule F (Form 1040), Profit or Loss From Farming (2025): https://www.irs.gov/pub/irs-pdf/f1040sf.pdf
- Instructions for Schedule F (Form 1040) (2025): https://www.irs.gov/pub/irs-pdf/i1040sf.pdf
Read from the IRS documents linked above on November 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.