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farming and the IRS
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<blockquote data-quote="Farminlund" data-source="post: 79661" data-attributes="member: 1132"><p>As already stated, get an ag accountant, he will not give you the type of advice your current guy is spouting. We ran at a loss for over 20 yrs; with initial depreciation (ponds, barns, corral, etc), every bit of equipment purchased, additional land acquisition, fencing, land clearing, cattle purchases, operating expenses, & on & on - kept records of all & never once had any questions nor did my accountant. The key to hobby farming as stated by my accountant is "hired labor" - constant losses (many yrs) with lots of hired labor $$ gets the IRS upset. They apparently then see it as a tax write-off & not a business <strong>you yourself</strong> are trying to make go. I guess the classic case that the IRS goes after as a hobby farmer is the rich doctor/lawyer type that buys the farm & then <strong>hires folk to run it</strong>, buys lots of new equipment, & so on - then reduces his gross income each year by like 70K+ or something. If you are putting money into the operation as you indicated, keep good records, & are the principle worker, my experience says not to worry.</p></blockquote><p></p>
[QUOTE="Farminlund, post: 79661, member: 1132"] As already stated, get an ag accountant, he will not give you the type of advice your current guy is spouting. We ran at a loss for over 20 yrs; with initial depreciation (ponds, barns, corral, etc), every bit of equipment purchased, additional land acquisition, fencing, land clearing, cattle purchases, operating expenses, & on & on - kept records of all & never once had any questions nor did my accountant. The key to hobby farming as stated by my accountant is "hired labor" - constant losses (many yrs) with lots of hired labor $$ gets the IRS upset. They apparently then see it as a tax write-off & not a business [b]you yourself[/b] are trying to make go. I guess the classic case that the IRS goes after as a hobby farmer is the rich doctor/lawyer type that buys the farm & then [b]hires folk to run it[/b], buys lots of new equipment, & so on - then reduces his gross income each year by like 70K+ or something. If you are putting money into the operation as you indicated, keep good records, & are the principle worker, my experience says not to worry. [/QUOTE]
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