In recent years, the relatively high rates of participation of farmers in federal farm programs have assured widespread utilization of Commodity Credit Corporation loan programs. CCC loans have, in the case of feed grains, wheat and some other commodities, involved nonrecourse loans as part of the price and income support feature of farm programs. Commodity loans from the Commodity Credit Corporation are nonrecourse loans to the extent the debtor may pay off the loan with a sufficient amount of an eligible commodity having a price support value equal to the outstanding value of the loan. If the loan plus interest is not paid, the commodity may be forfeited to CCC as full payment for the loan. Yet CCC loans are a peculiar kind of nonrecourse loan. If insufficient commodity of acceptable quality is transferred, the debtor is still personally liable for any deficiency.

The Congress, in an effort to provide a measure of flexibility in income tax planning for farmers on the cash method of accounting, provided many years ago for special treatment for CCC loans. It is assumed that CCC loans are to be treated as loans; but if a taxpayer elects, commodity value equal to a CCC loan may be reported as income.