Income Averaging for Farmers and Fishermen. This form is used to elect to figure a taxpayer's income tax by averaging, over the previous three years, all or part of their annual income from their trade or business of farming or fishing. This election can give the taxpayer a lower income tax if their annual income from farming or fishing is high and their taxable income from one or more of the previous years was low. In order to qualify for this election, the taxpayer is not required to have been in the business of farming or fishing during any of the base years.
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