Taxes and Claiming Loss?

[True Grit Farms]

I'm no expert, and I'm small time, but I don't understand this ongoing "not making a profit."
How does that work? Is it just a technicality or no profit "on paper?" I don't see how I could survive too many years in a row without a profit, even if it's just a small profit.

I think there must be expenses your not claiming. You need a benefits package for yourself as CEO. Cell phone, insurance package, get a good accountant, and a cheap attorney.

Cheap attorney? Do they even exist?

There in business with the honest one's.

 

[Bright Raven]

I prepare my own tax returns. I set up an accordion folder at the beginning of the new tax year. I have a pocket labeled for each Schedule F category - fuel, fertilizer, custom hire, supplies, etc. I have a pocket for income. A pocket for depreciation. A pocket for new capital purchases that will go into depreciation that tax year. When I sit down to do my taxes, I got everything in order to add up.

I agree with the above post that if you do your own taxes, you will understand the process.

PS: in regard to the original post subject: I don't know what the regulation or statute states but in practice if you are attempting to run your operation as a business with ligetimate expenses such as vet bills, feed, fuel, fencing, etc. and you have a reasonable ratio of expenses to income, they are highly likely to consider you in compliance.

 

[1982vett]

I use a CPA
I have a friend that told me he had around 40 bales of hay that got burned by some kids playing with matches. His tax person told him that he could not claim the 40 bales as a loss. I don't know why. He was selling the hay.

Gotta laugh a bit. My wife thinks the same about a dead calf last year.

By the way....the IRS wants it's share of the profits he would have made if he had sold the hay...... :mrgreen:

 

[ChrisB]

I use a CPA
I have a friend that told me he had around 40 bales of hay that got burned by some kids playing with matches. His tax person told him that he could not claim the 40 bales as a loss. I don't know why. He was selling the hay.

1982Vett explained it in a round about way. Your friend is actually getting to "claim a loss" on the hay due to the fact that his income went down by the amount he would have sold the hay for. So his taxable income has still gone down. Plus he still gets to claim all the expenses he had in putting up the hay in the first place. Hope that makes sense.

 

[Jogeephus]

I use a CPA
I have a friend that told me he had around 40 bales of hay that got burned by some kids playing with matches. His tax person told him that he could not claim the 40 bales as a loss. I don't know why. He was selling the hay.

1982Vett explained it in a round about way. Your friend is actually getting to "claim a loss" on the hay due to the fact that his income went down by the amount he would have sold the hay for. So his taxable income has still gone down. Plus he still gets to claim all the expenses he had in putting up the hay in the first place. Hope that makes sense.

True and that is fair enough in my book because on the other hand he doesn't have to claim any unused bales of hay as profit.

 

[Jasper]

Ok, I got it, it does make sense.
Thanks
He probably did get to file all the expense, and his profits were not as high.

 

[herofan]

I'm no expert, and I'm small time, but I don't understand this ongoing "not making a profit."
How does that work? Is it just a technicality or no profit "on paper?" I don't see how I could survive too many years in a row without a profit, even if it's just a small profit.

I think there must be expenses your not claiming. You need a benefits package for yourself as CEO. Cell phone, insurance package, get a good accountant, and a cheap attorney.

So it is just an "on paper" loss and not a real-life loss.

 

[BK9954]

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