1062

Deferral of Tax on Gain From the Sale or Exchange of Qualified Farmland Property to Qualified Farmers

Agency
IRS
Revision
December 2025
Fillable fields
26
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1
Official source
IRS form page
Checked
October 21, 2026
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Page 1 of form 1062

Form 1062: Deferral of Tax on Gain From Sale of Qualified Farmland to Qualified Farmers

Form 1062 is used to elect to defer payment of the net income tax attributable to gain from a qualified sale or exchange of qualified farmland property to qualified farmers. The instructions say that for tax years beginning after July 4, 2025, P.L. 119-21, commonly known as the One Big Beautiful Bill Act, created section 1062, which allows that tax to be paid in four equal annual installments beginning in the year of the qualified sale or exchange.

The election is made by filing Form 1062, a Schedule A (Form 1062) for each qualified sale or exchange, and a copy of the section 1062 covenant for each. The form figures net income tax with the farmland gain (Part I) and without it (Part II), and the difference is the section 1062 applicable net tax liability. Line 15 shows the first installment, 25% of that amount.

The form is filed with the seller's own income tax return. You can fill out Form 1062 free in your browser on this page and download it without an account.

What's on Form 1062

Header and Schedules A count

Name, identifying number, and the total number of Schedules A (Form 1062) being filed. A separate Schedule A is filed for each qualified sale or exchange.

Part I: net income tax with the gain

Lines 1 to 5: regular income tax, additions to regular tax, regular tax liability, and the foreign tax credit, nonrefundable personal credits, general business credits and other credits, ending in net income tax.

Part II: net income tax without the gain

Lines 6 to 13: taxable income, the total elected section 1062 gain from all Schedules A, line 13, and the tax and credits refigured on taxable income without that gain.

Part III: liability and first installment

Line 14 is the total section 1062 applicable net tax liability, line 5 minus line 13. Line 15 is the first installment due, 25% (0.25) of line 14.

How to fill out Form 1062

  1. 1

    Complete each Schedule A first

    Fill out a Schedule A (Form 1062) for each qualified sale or exchange. The instructions say that if any answer on Schedule A lines 4 through 8 is No, the sale does not qualify and is not included on Form 1062.

  2. 2

    Part I, lines 1 to 5

    Enter the regular income tax from your return, for example Form 1120, Schedule J, line 1a, or Form 1040, line 16, then additions to tax and credits. Line 5 is line 3 minus line 4z.

  3. 3

    Part II, lines 6 to 8

    Enter taxable income including the section 1062 gain, for example Form 1040, line 15. On line 7 enter the total from all Schedules A, line 13. Line 8 is line 6 minus line 7, and -0- if zero or less.

  4. 4

    Part II, lines 9 to 13

    Refigure the regular tax, additions to tax and credits using line 8 as taxable income. Line 13 is the net income tax without the gain.

  5. 5

    Part III, lines 14 and 15

    Subtract line 13 from line 5 for line 14, and enter -0- if zero or less. Multiply line 14 by 25% (0.25) for line 15. Both amounts also go on the applicable lines of your return.

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When, where and what to attach

Attach to your return

The instructions say to attach Form 1062, Schedule(s) A (Form 1062) and a copy of each section 1062 covenant to your income tax return and file by its due date, including extensions.

First installment

The instructions say the first installment is paid by the return due date for the year of the qualified sale or exchange, without extension, even if the election is made on a return filed by the extended due date.

Later installments

Each succeeding installment is paid by the return due date, without regard to any extension, for each of the 3 subsequent years.

Acceleration

The instructions say the unpaid installments become due early in some cases, such as a failure to timely pay an installment, the death of an individual taxpayer, or the liquidation or cessation of business of a C corporation.

Section 1062 covenant

The instructions define it as a legally enforceable restriction that prohibits using the property for any purpose other than farming during the 10-year period that begins on the day after the sale or exchange.

Related forms

Who files Form 1062?

  • Individual sellers of farmland

    An individual who sold or exchanged qualified farmland property to a qualified farmer and makes the section 1062 election attaches the form to their income tax return, such as Form 1040.

  • Corporations, trusts and estates

    Entities can also make the election. The form's line references include Form 1120, and the instructions describe acceleration rules for a C corporation, trust or estate.

  • Partners and S corporation shareholders

    When a partnership or S corporation has the qualified sale or exchange, the election is made at the partner or shareholder level. A partner or shareholder who elects files Form 1062 and their own Schedule A (Form 1062).

  • Partnerships and S corporations

    The instructions say partnerships and S corporations do not file Form 1062. They file Schedule A (Form 1062) with their return and give partners or shareholders their share of the gain, a copy of that Schedule A and a copy of the covenant.

The instructions say individuals and entities that elect to defer payment of the net income tax attributable to gain from a qualified sale or exchange file Form 1062.

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Questions about Form 1062

What does the section 1062 election do?

The instructions say it allows the net income tax attributable to gain from selling qualified farmland property to a qualified farmer to be paid in four equal annual installments beginning in the year of the sale or exchange.

What is qualified farmland property?

The instructions say it is real property in the United States used as a farm for farming purposes, or leased to a qualified farmer, during substantially all of the 10-year period ending on the sale date, and subject to a section 1062 covenant.

Who is a qualified farmer?

The instructions define a qualified farmer as any individual who is actively engaged in farming within the meaning of 7 U.S.C. 1308-1(b) and (c).

Does a partnership file Form 1062?

No. The instructions say partnerships and S corporations file Schedule A (Form 1062) with their return, and each partner or shareholder who elects files Form 1062 and their own Schedule A.

How much is the first installment?

Line 15 says to enter 25% (0.25) of line 14, the total section 1062 applicable net tax liability.

When is Form 1062 filed?

The instructions say no later than the due date, including extensions, of the income tax return for the year of the qualified sale or exchange.