Can WHIP+ Payments be Deferred to 2021

The Wildlife and Hurricane Indemnity Program Plus (WHIP+) provides disaster payments to producers for losses incurred due to hurricanes, wildfires and other qualifying natural disasters.  Signup opened in September 2019 and in February 2020, USDA added certain other losses as follows:

• Losses due to excessive moisture and D3 and D4 drought (signup opened March 23, 2020),
• 2018 and 2019 Sugar beet losses, and
• Quality losses

Signup ended October 30, 2020.

Farmers who are on the cash method of accounting and who typically defer more than 50% of their crop sales to the year after harvest are allowed to elect to defer those proceeds to the following year.  However, the deferral is only allowed to the year after the actual damage occurs.

Most of the 2020 WHIP+ proceeds relate to damage that occurred in either 2018 or 2019.  Those payments are not eligible for deferral even though the farmer otherwise qualifies. 

The only WHIP+ payments that can be deferred are payments directly related to 2020 damage.  Even though this is not “crop insurance” the tax code specifically states that governmental disaster payments will qualify as “crop insurance” for purposes of this provision.

The payment limitation is $125,000 per person or legal entity, however, this can increase to $250,000 if more than 75% of adjusted gross income (AGI) is from farming.  There is an overall $500,000 limit for 2018, 2019 and 2020. Many farmers automatically assume their operation will qualify, however, if they show a loss on Schedule F and have gains on Form 4797 or outside wage income, it is highly unlikely that they will qualify for the increased payment amount.  They need to show sufficient Schedule F farm income to allow the equipment gains to qualify.