Crop Method

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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.

INVESTOPEDIA EXPLAINS '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.

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