Crop Method

DEFINITION of 'Crop Method'

This method of accounting is available for farmers who do not harvest and sell their crops in the same year that they planted and grew them. The crop method allows the farmer to deduct the full cost of crop production in the year that the crop is actually sold. This effectively allows the farmer to write off the production cost against the revenue received in the same year.

BREAKING DOWN 'Crop Method'

The cost of production in this case includes the cost of purchasing seed or baby plants. The crop method is one of several special methods of accounting available for farmers. However, the farmer must petition the IRS for approval before using this method of accounting.

RELATED TERMS
  1. Crop-Hail Insurance

    A type of insurance that insures against crop damage caused by ...
  2. Crop Year

    The time period from one year's harvest to the next for an agricultural ...
  3. Market Value Clause

    An insurance policy clause that sets the value of covered property ...
  4. Accounting Method

    The method by which income and expenses are reported for taxation ...
  5. Agroforestry

    The integration of agriculture and/or farming with forestry so ...
  6. Farmer Mac - Federal Agricultural ...

    A publicly traded, shareholder-owned corporation that was federally ...
Related Articles
  1. Markets

    Three Agriculture Startups Disrupting Monsanto

    Even as technology startups have disrupted other industries, agriculture has remained immune to its effect. But that is about to change.
  2. ETFs & Mutual Funds

    A Lot To Like About Fertilizer Companies

    Agriculture stocks are long-term plays that are becoming more attractive during the market selloff.
  3. Personal Finance

    10 Ways to Save Money at the Farmers' Market

    Strategic shopping can help your budget as well as your health.
  4. Trading

    Investing Seasonally In The Corn Market

    Each month can bring new growth opportunities, if you know where the right investment seeds are.
  5. Trading

    How to Use Commodity Futures to Hedge

    Both producers and consumers of commodities can use futures to hedge. We explain, using a few examples, how to achieve commodity hedging with futures.
  6. ETFs & Mutual Funds

    Follow This Insider's $106 Million Bet On A Potential Industry Boom

    <p>Few sectors have been hit as hard this year as agriculture. Record-high crop production and a strong dollar are driving grain prices to m...
  7. Markets

    Whole Foods 365: The Economics of Discount Organic

    Whole Foods Market is expanding its brand to create a chain of discount natural food stores called 365 by Whole Foods Market. With the high cost of producing, shipping and selling organic food, ...
  8. Markets

    Top Agricultural Producing Countries

    Discover which countries produce the most agricultural products, which export the most and what is being done to increase production.
  9. Markets

    The Industry Handbook: The Agriculture Industry (COW, LSTK)

    Learn about the major lines of businesses involved in the agriculture industry and why this industry as a whole may be the most important in the world.
  10. Markets

    Commodities Outlook For The Remainder Of 2012: Agriculture

    Of the agricultural commodities, corn in the U.S. has become the biggest story. What was supposed to be the largest crop ever, was crushed by a drought in the Midwest. Corn is the main energy ...
RELATED FAQS
  1. What is the point of agricultural subsidies?

    Read about the historical origins of agricultural subsidies, and find out why the government spends hundreds of billions ... Read Answer >>
  2. When do you use installment sales method vs. the cost recovery method?

    Take a deeper look at the installment sales method and the cost recovery method of recognizing business sales revenue and ... Read Answer >>
  3. How does scarcity affect global agriculture stocks?

    Explore how scarcity affects the price of agricultural stocks. Learn how the price of agricultural commodities is closely ... Read Answer >>
  4. How can individuals or businesses handle transaction costs for economic externalities?

    Find out how businesses can work with each other, their customers or third parties to help internalize external costs or ... Read Answer >>
  5. Why does the Internal Revenue Service (IRS) care about accounting practices?

    Learn why the Internal Revenue Service cares about accounting practices, as these ensure the accurate reporting of financial ... Read Answer >>
  6. What are the main methods for calculating business costs?

    See why different economic actors use different methods for calculating costs, and learn how different methods can impact ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center