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Help wanted Tax write-off chickens

Discussion in 'Managing Your Flock' started by Kakadoodledoo, Aug 8, 2013.

  1. Kakadoodledoo

    Kakadoodledoo Out Of The Brooder

    Apr 22, 2013
    Please give me suggestions on how to claim your chickens as a tax write off. I know some people do so please no nay sayers. I have saved receipts from my initial investments: coop construction, feed, and chicks. I'm planning on claiming a loss the first year and claiming some income on egg sales for the following years. I'm an urban chicken farmer with 10 layers in Utah. I know some people are able to write-off property tax for the coop and run square footage. Please help me go about this. The more details the better.
  2. olgreenie

    olgreenie Out Of The Brooder

    Feb 20, 2013
    I questioned my "Tax Man" about this and his response was.........

    If your expenses are far more greater than your income it's then considered a hobby. With only 10 birds I doubt that your income is greater than your expense. I know as a fact that mine are not and I have twice the amount of birds than you. I just had to suck it up and call it a hobby!
  3. bobbi-j

    bobbi-j Overrun With Chickens

    Mar 15, 2010
    On the MN prairie.
    The best thing you can do is talk to a tax consultant in your area.
  4. theoldchick

    theoldchick The Chicken Whisperer

    May 11, 2010
    We obtained a business license, tax ID, and became an LLC.
  5. Bossroo

    Bossroo Chillin' With My Peeps

    Jun 15, 2008
    Reality check... My wife is a business tax auditor at the IRS. She also is an instructor of new hires all over the country. The Tax Code book is very thick, so I will touch on just on a few items. To be a business , one has to have a business license, a Tax ID number, a business plan, accounting books, continuing education in the field, etc. show a profit in 3 out of 5 years or it will be considered a hoby. The coop / barn has to be depreciated over 39 years. Items such as the cost of feed, start up cost, fuel, vehicle, share of property taxes, HO / business/ liability insurance, workman's comp, and labor costs are deductable ( if excessive as to other income, it is a red flag to the computers and you WILL be audited) . I can buy a dozen of regular eggs for $1.69 or a dozen "organic" eggs for $2.49 at the local grocery stores. Just considering ONLY the feed costs, You purchase regular feed in 40-50 lb bags at a high price, you can get volume discounts if offered at the feed store. The big boys buy their feed in multi ton units at a mere fraction of your costs. "Organic" feed will cost up to several times over and the "organic" mill may or may not be able to supply your needs. You may or may not be able to sell eggs at a higher price that what I can buy them for. Therefore it is VERY difficult to make a profit on a small scale. The IRS does not care how cute the chickens are, if they free range or not, how "humane" they are raised, or if they are "organic or not, all they look at is the bottom line of if you made a profit so that you get a tax bill. The "some people " have to show a profit in 3 out of 5 years, or they will be audited and if found to be a hoby, they will be assessed back taxes plus penalties. I hope that this little glimps helps ! [​IMG]
  6. donrae

    donrae Hopelessly Addicted

    Jun 18, 2010
    Southern Oregon
    If you know "some people" who do this, maybe you should talk to them. Or better yet, an accountant.

    Me, I'm not chancing flagging anything from the IRS, especially for such a small amount of money. Those folks skeer me[​IMG]
    Last edited: Aug 9, 2013
  7. Bossroo

    Bossroo Chillin' With My Peeps

    Jun 15, 2008
    Using any accountant may or may not be of any benefit or value ... depends if that accountant is very familiar with farming as well as schedule "F" . Most only use the " garbage in , garbage out" method , where they use only the information what is provided to them by the tax payer as they have very little / no clue as to the validity of the farming deductions. [​IMG]
  8. Bossroo

    Bossroo Chillin' With My Peeps

    Jun 15, 2008
    Edit to add : My wife' office is currently auditing 3 Tax preparers / CPAs together with dozens of their clients for this type of violations of the law. If the tax preparer CPAs are found guilty, they will be desiplined and fined HEAVILY. Many of the tax payers have no clue as to some of the claimed deductions submited by the tax preparer on the tax return. They were just pleased to read how much money would be returned to them. Those tax payers that have tax errors will be assessed back taxes plus fines. [​IMG]
  9. redmoo

    redmoo Out Of The Brooder

    Aug 3, 2013
    Sorry, I know you said no nay sayers, but please know that the IRS has cracked down on hobby farmers who attempt to deduct expenses.
  10. ieatchicken

    ieatchicken New Egg

    Apr 14, 2015
    Only if you are not making an attempt to make it a business. We sell about 3 dozen a week. I built a coop and a run for about $800 and wrote that off. I use the money to buy feed etc. So you only need to show a profit 1 out of 5 years. I will have made a profit after 5 years once the eggs pay for the coop and feed.

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