From 1983 to 1989, US agricultural debt dropped by about $60 billion as debts were discharged in bankruptcy, obligations were restructured with debt written off and property was deeded back to creditors. The resulting tax consequences created highly significant income tax burdens for debtors and contributed to various proposals for debtor relief from tax liability. However, except for relief from alternative minimum tax liability stemming from capital gains and a new solvent farm debtor rule for discharge of indebtedness, farm and ranch debtors were consigned to working through their debt problems within existing tax law.

In the January 19, 1990, Agricultural Law Digest, at page 33, we reported that Congress had not acted to permit deferral of benefits under the Disaster Assistance Act of 1989 as had been done for the Disaster Assistance Act of 1988. Thus, benefits on the 1989 act received in 1989 were not deferrable to 1990 under the provision permitting crop insurance proceeds (and eligible federal disaster assistance act benefits) to be deferred to the following year by a farmer on the cash method of accounting if, under the taxpayer's practice, income from sale of the crop would have been reported in the following year.