From the 1960s to the 1980s, farmers were incorporating as C corporations to capitalize on tax advantages that allowed them to write off personal expenses, such as housing. When the 1986 Tax Reform Act was introduced, many farmers switched to an S corporation, where they wouldn’t be double taxed like they would have in a post-reform C corporation. Fast-forward to 2021, the Biden tax plan could again make C corporations desireable once more. The administration has proposed subjecting S corporation K-1 income to self-employment tax, among other policies that make the S corporation category less attractive. Those that have not switched from a C corporation may be better off staying put if the plan comes to fruition, but it’s important that farmers consult a tax professional to help assess which areas of their operation will carry tax liability before making a decision. Read more on the impact of the new tax reform here.