backyard flock....taxable deduction as a farm????

[prairiepearls]

OK, I see mac posted a state-specific answer for you, tonini, while I was typing.

 

[Mac in Wisco]

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You've just become my best friend! If you're a tax preparer I have some questions on depreciation for you. I'll PM you later.

 

[prairiepearls]

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You've just become my best friend! If you're a tax preparer I have some questions on depreciation for you. I'll PM you later.

I'll be glad to help if I can! Say, I noticed your "handle" says "in abilene" and location "in Wisconsin." I live in Wichita, but am originally from Wisconsin -- 35 years ago!

Whereabouts in WI are you?

 

[augustmomx2]

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NOW, I get it

Thank you for the example, I think this subject needs a sticky....Thanks!

 

[Mac in Wisco]

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I'm glad somebody got something useful out of that. Sometimes I wonder if I'm just talking to myself.

 

[Luvducks]

I also learned from this post, Thank you everyone on BOTH sides!

 

[Mac in Wisco]

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Both sides of what? The border?

 

[mistyfeather]

wow thats realy cool! except here we have to get a buisness license , even as sole proprietor (i dont think i spelled that right)

they make us go thru tomany hoops around here ! im a certified massage therapist and last year they pased a law that you had to be licensed no mater how many years youve been practicing you have to get the license, not that bad except you have to pay almost $200 in fees and crap to get the license

sorry that was way off topic

 

[Mac in Wisco]

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Not really. It talks to the matter of how to manage your activities as a business vs a hobby, which allows a person certain tax benefits.

Many people are under the assumption that they need a business license to be a business, need to be incorporated, or would have to go through some sort of extensive process to legally do business. That's not necessarily so. You just need to do business and follow the applicable laws of your state. I have a large egg business, but the scope of my operations doesn't require any permits or certification (beyond my organic certification anyways, which is another matter entirely). The majority of my eggs are sold as nest-run to a co-op where they are shipped to a plant, processed, and marketed. As a producer I don't need any permits. I am allowed to sell ungraded, unprocessed eggs unencumbered by any federal or state laws directly to the consumer from my farm. If I want to sell eggs off premises to consumers I would need a Mobile Retail Food Establishment License from the state. If I wanted to sell to businesses and restaurants I would need a Food Processing Plant License from the state. If I lived in an area that required a business permit, I would have to apply for one and pay appropriate fees. If I wanted to operate under a business name I would have to file the appropriate form with the county or state. And so on and so forth... It's just a matter of following the state laws particular to your industry.

The topic of whether or not a small backyard flock keeper can make a profit comes up quite often. Many say "no way, costs are too high", or "I just barely manage to break even", but what if you didn't have to pay income and sales taxes on every dollar you spent for your flock? That's quite a savings there and with a little extra effort in marketing could put you solidly in the black.

 

[glenolam]

I'm resurrecting this thread because I've posted a question over on BYH and it completely relates to this. I thought I'd post it here in hopes of getting advice from folks who may not be on that site.

Here's the thread in case you want to read it.

I want to sell my goat kids for 2 reasons - to help with the feed bill and to allow other families like mine to have quality goats but not at registered, full blood prices. I know registered means more money; however, I can't yet get rid of the shock factor I had when I started looking into getting goats. In my area, a registered goat cost at least $200, a doeling was upwards of $250-$400. Luckily I found a breeder who had mixed breeds and I ended up with a few great does.

Anyway, I wanted feedback about starting a hobby farm. I was thinking of filing form 5213 just in case things do start to go well and to cover my behind, and in the meantime just put the additional income on our 1040 and add the expenses to our misc deductions.

If anyone does this (as a hobby farm, not necessarily as a business), I would really like to hear if you think it actually hurts you to sell your animals. After reading up on the topic, my mind is thinking I won't have much income at all, and all the income will be written off with the first category of deductions (mortgage interest, property/real estate taxes, etc) and the additional expenses we incur won't matter at all. However, if that is the case, will we end up paying more in taxes due to the additional income because there isn't enough additional income to make the expenses worth it? Please let me know if that is confusing and you don't get my question - sometimes I have a hard time formulating my thoughts!

I appreciate the help and advice!