You can be engaged in the business of farming if you cultivate, operate, or manage a farm with the objective of making a profit or gain as either the owner or a tenant. Farming includes cultivating land, operating dairy farms, fruit farms, nurseries, orchards, poultry farms, fish farms, plantations, ranches, ranges, stock farms, truck farms, and the sale of crop shares. It also includes the breeding and raising of fur-bearing animals. However, it doesn’t include the breeding, raising, or caring for dogs, cats, or other pets.
Your farm income includes both money and the fair market value of property or services that you receive from cultivating, operating, or managing a farm for gain or profit. Determining the profit or loss from a farm is essentially no different than determining the profit or loss from any other business. However, you use Schedule F (rather than Schedule C) to calculate the profit or loss of your farm. You are usually self-employed if you operate your own farm on land that you either own or rent.
Because you’re self-employed, you obtain Social Security coverage by calculating your self-employment tax on Schedule E and paying self-employment tax. If your farm income is below a certain level, there’s a method you can use instead to compute self-employment tax.
Because it’s difficult to predict farm income, the estimated tax rules are a bit different for farmers.
For more information, see IRS Publication 225, Farmer's Tax Guide.