Farmers Can Borrow Against Corn Without Selling It, Triggering Social Security Earnings

A Midwestern grain farmer facing weak corn prices can choose to borrow against his crop instead of selling it. Under IRC Section 77, farmers can elect to report Commodity Credit Corporation loan proceeds as Schedule F income, which can trigger Social Security earnings even without selling a crop.

This election treats the pledged crop as though it had been sold for the loan amount, allowing farmers to accelerate their income and potentially fill low-income years. The farmer can use this timing lever to make better use of deductions or smooth taxable farm income between seasons.

However, if the farmer is collecting Social Security benefits before full retirement age (FRA), reporting the loan proceeds as Schedule F income may increase the farm earnings that count against their benefits. In 2026, someone below FRA for the entire year can earn $24,480 before Social Security withholds $1 in benefits for every $2 above the limit.

Once a farmer reports a marketing assistance loan as income when received, the IRS generally requires the same treatment for other such loans that year and in later years. Before making this election, farmers should compare tax outcomes and review their earnings history to ensure it's beneficial for them.