Net profit to slip on California farms

Gross farm income in California for 1980 will increase slightly but net income will decline, according to a Bank of America report. The bank projects that the state's 1980 gross farm income will reach $12.9 billion, up 5 percent from last year, while net income will be approximately $3. 5 billion, down 6.4 percent from last year's record $3.8 billion.

Total receipts for field crops are expected to climb 17 percent in 1980, to $ 2.6 billion. Gross income for vegetables is predicted to drop about 7.5 percent , however.

Milk will lead all California commodities in sales this year, up as much as 15 percent from 1979, to $1.6 billion, according to the study. Income from the sale of cattle and calves will show an 8 to 10 percent decline, as lower prices for pork and poultry lessen consumer demand for beef. Overall, cash receipts for livestock and livestock products are projected to increase 5 percent, to $4. 1 billion.

For the interest deduction to be disallowed, the IRS must "reasonably infer" that the loan proceeds are used to make the investment and are not used for personal, noninvestment purposes. New and current loans are covered.