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There is considerable concern within the accounting profession whether GAAP (Generally Accepted Accounting Procedures) should include contingencies in the financial statements of businesses. A contingency involves the potential gain or loss arising from an uncertain future event. The question then is, if there is the possibility of a future unexpected and unpredictable event involving financial loss, should financial reserves be dedicated to this so that the financial position of the firm is more accurately reported? While this issue of accurate financial reporting for contingencies is receiving attention for the benefit of investors in nonfarm business corporations, there are contingencies in the agricultural setting that should also be considered. Generally, potential losses receive the bulk of the attention as compared to gains. In agriculture, while disasters of the type described above are possible, it is income tax issues that are addressed here.