Hobby Farmer or not ?

[Dave]

Here there is no size limit to get the sale tax exemption. But to get into the open space ag which lowers your property tax you have to more than 40 acres or with less acreage you have to prove income at $250 per acre for about 5 years.

 

[Calhoun Farm]

My uncles property isn't for Ag, it joins up to a 4 lane hwy that could be considered commercial.

 

[Deepsouth]

I don't think the size of the farm or the number of cows is any indication of what is and what's not a hobby farm. A rich contractor bought out a pretty large farm for our area. He bought a couple of hundred registered black angus. In a couple of more years he's one of the largest Cattlemen in the state. He had several full time hands working the place. Big fall sale every year the whole works. Nice cattle and nice place. Construction business slowed way down and two years latter he sold the ranch. I didn't know the uy personally. Never heard a bad thing said about him but I'm not sure how much he really knew about cattle. I think it was just a hobby. A big, expensive hobby but still just a hobby. And a tax shelter.

 

[HDRider]

This is the only definition I'd be worried about....

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer's trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
  Does the taxpayer depend on income from the activity?
  If there are losses, are they due to circumstances beyond the taxpayer's control or did they occur in the start-up phase of the business?
  Has the taxpayer changed methods of operation to improve profitability?
  Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
  Has the taxpayer made a profit in similar activities in the past?
  Does the activity make a profit in some years?
  Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.

http://www.irs.gov/uac/Business-or-Hobb ... Deductions