Tax deductions question for breeding stock

[NonTypicalCPA]

Yes capital growth, both in the herd and in your improved real estate would definitely be an argument to make against the 7 years of losses.

 

[NonTypicalCPA]

A timber farm is similar, usually only significant income in 1 out of 10-15 years. But the live tree growth adds value to your property each year, thus offsetting annual losses in non harvesting years.

 

[Katpau]

Katpau - I do my own taxes by hand (just like you explained). Does the TAX CUT program really work well for all our forms (farmers). Can you electronic file using that program?
I use the Federal electronic system, because you can use any and all forms necessary & fill them in as you go, but NY does not have a program that a farmer can use. So, for state, I have to file thru the mail.

Jeanne,
I use TaxCut to calculate and print out my tax return, but it is not really designed to cover all of the complexities of a farm return. I also have a rather complicated program that I designed using Excel that I use for my own situation. I keep that up on almost a daily basis, so my return is ready to be completed as soon as 1099's arrive and I verify all numbers are the same. We also have some rentals and hunting leases. I use the numbers from my Excel calculations and manually enter them into schedules F and E. All of the forms are available on TaxCut, but I manually access them to enter information, rather than depending on the program to guide me there. I appreciate the calculations that TaxCut does with my numbers. Especially the depreciation calculations. I don't like that I need to verify every number for each capital item every year, but that does make me refresh my mind about what assets may have been retired or sold. I feel TaxCut saves me a lot of time and helps avoid simple math errors, but it may not be suitable for someone who doesn't already know which forms are required. It does ask questions that should lead you in the right direction for most returns.
I don't believe you can file a return as complicated as most farm returns electronically, but I may be wrong. I file my relatives returns electronically, but I send in my return by mail. There is almost always a balance due, so I am mailing a check anyway. I have never tried the Federal electronic system, but I will have to look into that. I don't think it was available when I first started using TaxCut years ago. The nice thing about staying with the same program is that all of your information from prior years is stored and you don't need to reenter that information. For example I have pages of depreciation sheets on all of our various assets and TaxCut stores them from year to year and remembers what method of depreciation I chose for each and my current basis. It does not carry that information to 4797 when something is sold, so I must remove it from inventory and manually enter that information. I think there may be more expensive programs that would do that for me, but I kind of prefer it this way.

 

[Jeanne - Simme Valley]

Katpau
I use Excel for my depreciation, so everything is all lined up. I just have to enter info for the new year.
The Federal E-File is GREAT. You start with your 1040, when you get to a line that needs a form, you open that form & fill it out (it does the calculations and fills in the final figure into the 1040).
I already know what forms are needed, but I think someone that has a good handle on the forms needed should be able to do it. You would have no problem. You will LOVE IT.

 

[1982vett]

I've been a Quicken user since DOS 6.0 around 1993. Scares me every time I have to upgrade to a new version. Their are plenty of horror stories every year about the new versions and for a period of time one updated yearly in hopes they would fix what the screwed with in the previous version. Around the end of October or early November I get a copy of TurboTax that I use to tax plan and estimate taxes for the year. In March I print a cash flow report and an itemized transaction report and take these along with all other necessary information to my tax preparer. When I go back to review the return I have a good idea what it should look like. Biggest difference in numbers is my errors in getting the depreciation reports to match. TurboTax does track depreciation and carry forward to form 4797 when you sell or dispose of the property.