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If the limit applies, you can deduct prepaid farm supplies that don’t exceed 50% of your other deductible farm expenses in the year of payment. You can deduct the excess only in the year you use or consume the supplies (other than poultry, which is deductible as explained above).
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However, you must use short-term losses to offset short-term gains and long-term losses to offset long-term gains. If you have a net capital loss in any year – that is, your losses exceed your gains – you can usually deduct up to $3,000 of this amount from regular income on your tax return.
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