Hobby Farm?

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Bernard

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In a post (somewhere) on this site someone alluded to the distinction the IRS may make between someone with small acreage / few cattle (hobby) versus a larger enterprise which presumeably qualifies as a for-profit business. And, the implication was that tax issues were involved and that a consultant should be employed. Is this a legitimate concern for someone who has plans for an initial small startup? Is there a break point, baseline or formula that determines which is which? And finally, if I do need to "consult", are the tax issues basic or do I need to find someone who specializes in Agribusiness?

Long, complicated post, I know. Sorry.
 
I ONLY HAVE A FEW HEAD , BUT MY HOME OWNERS INSURANCE WOULDN'T COVER THEM IF THEY WERE TO GET OUT AND GET HIT IN THE ROAD. FARM BEUREAU INS. TOLD ME ANYTHING THAT I RAISED THAT WOULD EXCEDE MY OWN CONSUMPTION WOULD BE CONSIDERED A BUISINESS. SO I BOUGHT A FARM LIABILITY POLICY AND STARTED DEDUCTING MY ANIMALS ON MY TAXES AS A SUPLIMENTARY INCOME.
I REPORT MY INCOME ON THE FOUR CALVES I SELL A YEAR AND THE EXPENSES TO RAISE THEM. MY TAX GUY SAYS IT'S LEGITAMENT.
CHECK WITH A CPA TO SEE IF YOU QUALIFY.
 
If every audited by the IRS your burden of proof would be intent. Are you trying to make money or just in it for fun? Also, if you show a loss for a certain number of years (used to be 3 years) the IRS can disqualify the losses. The size of your operation has nothing to do with the business aspect. I would highly recommend keeping good records. For a small operation you do not need an Agri CPA. Usually you deduct the purchase price of livestock in the year of sale.
 

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