Can I claim a farm loss on taxes for my hens?

Fred's Hens :

Tax advice from an anonymous internet forum. Priceless.

Seriously, unless you enjoy meeting new people (at an IRS audit process), you might want to obtain professional guidance.

Agree with this 100%.

We are total farm income and I'd never try to do my own taxes.
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I would think the miniscule amount it might save you.....if it even does, would not be worth the red flag it might send up to the IRS. I can tell you on the fuel....we are full time farmers and only have farm income and we can't claim any but a small percentage of our over the road fuel.....and only then with reciepts that prove I was getting parts or something else farm related.​
 
IF it's anything like it used to be.....a "hobby business" MUST "show-a-profit" in 2 or 3 years of any 5-year period.....or else YOU pay it all back as though there were no "business" deductions.

MAYBE (likely), it's different NOW.

I dunno.
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As far as I can tell- and maybe this is why some of you are saying to obtain professional advice:)- you just list yourself as a farm when you are doing your taxes- there's nothing else to do that I know of:) And I do enjoy meeting new people (Except for IRS people:)
 
My DH was born Farm, and always does our taxes himself. BUT, we almost always get a nice note from the IRS saying that they "adjusted" it for one reason or another. And, it seems they like to wait a couple years before "requesting" additional information. I think they are hoping that you will have lost the records by then, and just pay up the extra they say you owe.

My DH is one of those rare birds that actually LIKES tormenting IRS agents, telemarketers, and bill collectors. He was once a collections agent himself, and knows how the system works. He drives them nuts with a firm calmness that won't let them off the phone until he gets his way. This totally messes up their call-stats for the day, they really hate that!

If like most sane people, you would prefer NOT to deal with under-trained, overworked, government employees with a quota to meet, I would DEFINITELY recommend having a professional do it for you.
 
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I think that is true for farming, poultry/egg production and that stuff. But I believe if you are able to show it's your sole source of income and you break even and don't make a profit after 5 years, you are not penalized. Could someone more knoweldgeable verify (or correct) this?
 
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You don't need to qualify your enterprise in any way as a "farm". If you are involved in agricultural production for profit, even if it's in your backyard, you just file the Schedule F.

The key words there are "for profit". The IRS does not look kindly on you writing off hobby expenses to reduce your income from other sources. Read the appropriate section in Pub 225 on For Profit vs Hobby income and losses. If you have a For Profit activity you are expected to treat it like a business. That is, you are expected to operate your activities in a businesslike manner, try to make a profit, keep the appropriate books, etc. If you continually post a loss against your other income, the IRS will eventually audit your records, determine that you have a hobby activity, and then make you pay back taxes on the losses that you posted.

Pub 225 has everything you need. You mentioned expensing the cost of a coop. The cost of those kind of assets generally have to be capitalized and depreciated over time, because they have a useful life of more than one year.
 
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Not quite. The way the IRS looks at is that you are supposed to report all hobby income. You are allowed to deduct your expenses, but because it's a hobby you are not allowed to post a loss against income from other sources. This only benefits the IRS. If you do have a profit, that profit is taxable. If you don't have a profit it's a wash, you owe nothing, but can't use any loss to your benefit.

If they happened to call your bluff, you would only pay back the losses that you posted against other income.
 

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