Rev. Rul. 78-110

Advice has been requested whether a mutual casualty insurance company is required to file information returns to report hail crop insurance proceeds paid to farmers.

Section 6041(a) of the Code requires that all persons engaged in a trade or business and making payment in the course of such trade or business to another person of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income, of $600 or more in any taxable year, shall render a true and accurate return in such form and manner and to such extent as may be prescribed by the regulations.

Section 451(d) of the Internal Revenue Code of 1954 provides that in the case of insurance proceeds received as a result of destruction or damage to crops, a taxpayer reporting on the cash receipts and disbursements method of accounting may elect to include such proceeds in income for the taxable year following the taxable year of destruction or damage if the taxpayer establishes that income from such crops would have been reported in a following taxable year.

Section 1.6041-1(c) of the regulations defines "fixed or determinable income." Income is fixed when it is paid in amounts definitely predetermined. Income is determinable whenever there is a basis of calculation by which the amount to be paid may be ascertained.

The specific question is whether, because of the uncertainty of the year that a farmer might include insurance proceeds in income, such proceeds are fixed or determinable income within the meaning of section 6041(a) of the Code.

The election provided by section 451(d) of the Codes does not affect the status of the insurance proceeds as "fixed or determinable" income. Amounts paid to farmers as hail crop insurance proceeds are fixed or determinable at the time the payments are made.

Accordingly, a mutual casualty insurance company is required to file information returns to report crop insurance proceeds of $600 or more paid to farmers.