5.26 Ark. Code R. 51-424(a)(1)
Losses incurred in the operation of farms as business enterprises are deductible from gross income. If farm products are held for a more favorable market, no deductions for shrinkage in weight or physical value by reason of deterioration in storage shall be allowed. Shrinkage may be allowed if an inventory is used to determine profits.
The total loss by frost, storm, flood or fire of a crop not yet harvested is not a deductible loss in computing net income.
A farmer engaged in raising and selling livestock, such as poultry, hogs, cattle, sheep, horses, etc., is not entitled to claim as a loss the value of such animals raised on the farm that perish, unless an inventory is used. The cost of any feed, pasture, or care which has been deducted as an expense of operation shall not be included as part of the cost of the livestock for the purpose of ascertaining the amount of deductible loss.
If a taxpayer owns and operates a farm in addition to being engaged in another trade, business, or calling and sustains a farm related loss, the amount of the farming loss sustained may be deducted from gross income received from all sources, provided the farm is operated for profit and not for recreation or pleasure.
5.26 Ark. Code R. 51-424(a)(1)