§ 9.304 Allowable gross revenue. ( a ) For the purposes of this subpart, “allowable gross revenue” includes revenue from: ( 1 ) Sales of agricultural commodities produced by the producer, including sales resulting from value added through post-production activities;
( 2 ) Sales of agricultural commodities a producer purchased for resale that had a change in characteristic due to the time held (for example, a plant purchased at a size of 2 inches and sold as an 18-inch plant after 4 months), less the cost or other basis of such commodities;
( 3 ) The taxable amount of cooperative distributions directly related to the sale of the agricultural commodities produced by the producer;
( 4 ) Benefits under the following agricultural programs: ARC and PLC, BCAP, DMC, LDP, MFP, MLG, and MPP-Dairy;
( 5 ) CCC loans, if treated as income and reported to IRS;
( 6 ) Crop insurance proceeds;
( 7 ) Federal disaster program payments under the following programs: 2017 WHIP, ELAP, LFP, LIP, NAP, Milk Loss Program, On-Farm Storage Loss Program, STRP, TAP, and WHIP+;
( 8 ) Payments issued through grant agreements with FSA for losses of agricultural commodities;
( 9 ) Grants from the Department of Commerce, National Oceanic and Atmospheric Administration and State program funds providing direct payments for the loss of agricultural commodities or the loss of revenue from agricultural commodities;
( 10 ) Revenue from raised breeding livestock;
( 11 ) Revenue earned as a cattle feeder operation;
( 12 ) Other revenue directly related to the production of agricultural commodities that IRS requires the producer to report as income and
( 13 ) For 2020 allowable gross revenue, payments PMVAP regardless of the calendar year in which the payment was received.
( b ) Allowable gross revenue does not include revenue from sources other than those listed in paragraph (a) of this section, including but not limited to, revenue from: ( 1 ) Applicable pandemic assistance;
( 2 ) Sales of commodities that are excluded from “agricultural commodities,”
( 3 ) Resale items not held for characteristic change;
( 4 ) Income from a pass-through entity such as an S Corp or limited liability company;
( 5 ) Conservation program payments;
( 6 ) Any pandemic assistance payments that were not intended to compensate for the loss of agricultural commodities or the loss of revenue from agricultural commodities due to the pandemic (for example, payments to provide assistance with the cost of purchasing personal protective equipment, retrofitting facilities for worker and consumer safety, shifting to online sales platforms, transportation, worker housing, or medical costs);
( 7 ) Custom hire income;
( 8 ) Net gain from hedging or speculation;
( 9 ) Wages, salaries, tips, and cash rent;
( 10 ) Rental of equipment or supplies; and
( 11 ) Acting as a contract producer of an agricultural commodity.
( c ) If a producer did not have a full year of revenue for 2018 or 2019, or increased their production capacity in 2020 compared to 2018 or 2019, the producer may certify to an adjusted 2018 or 2019 allowable gross revenue on form FSA-1122A. Increases in production capacity do not include changes due to crop rotation from year to year, changes in farming practices such as converting from conventional tillage to no-till, or increasing the rate of fertilizers or chemicals. Documentation required to support such an adjustment must be provided within 30 calendar days of submitting their PARP application and demonstrate that the producer: ( 1 ) Had the production capacity to support the expected full year revenue;
( 2 ) Added production capacity to the farming operation;
( 3 ) Increased the use of existing production capacity; or
( 4 ) Made physical alterations to existing production capacity.
( d ) If a producer did not have allowable gross revenue in 2018 and 2019, the producer must certify on form FSA-1122A as to what had been their reasonably expected 2020 allowable gross revenue prior to the impact of the COVID-19 pandemic. Documentation required to support the producer's certification must be provided within 30 calendar days of submitting the producer's PARP application. Acceptable documentation must be generated in the ordinary course of business and dated prior to the impact of the COVID-19 pandemic and includes, but is not limited to: ( 1 ) Financial documents such as a business plan or cash flow statement that demonstrate an expected level of revenue;
( 2 ) Sales contracts or purchase agreements; and
( 3 ) Documentation supporting production capacity, use of existing production capacity, or physical alterations that demonstrate production capacity.
( e ) A producer who does not provide acceptable documentation described in paragraph (c) or (d) of this section within 30 calendar days of submitting their application is not eligible for an adjustment to their 2019 allowable gross revenue or to have their payment calculated using an expected 2020 allowable gross revenue, as applicable.
( f ) Except as provided in paragraph (a)(13) of this section, the allowable gross revenue for a specific calendar year will be based on the calendar year in which that revenue was received by the producer.
( g ) Producers who file or would file a joint tax return will certify their allowable gross revenue based on what it would have been had they filed taxes separately for the applicable year.