tax break for selling eggs?

[bigmommy]

Ever since we decided to get chickens I have heard " if you sell just 1 egg you qualify as a farmer, and will receive a tax break" of course....no one knows how, why, or what exactly the break will be. Can someone please clarify this for me? I understand that all states have different laws, but a general explanation would be great!

 

[cdeans]

that would be great!!

 

[Teach97]

Why don't we do like the porn industry and complain to congress because of the weak economy nobody has been buying stuff like before...with the exception of that $1200 silkie but they didn't buy it from me!

 

[miss_jayne]

Quote:
the tax laws are very clear. you cannot claim food or price of chickens until the following year. just like seed for crops.

http://www.irs.gov/publications/p225/index.html


the breaks are many. but, you have to make a sizable profit your second year claiming or you're no longer able to claim the write offs.

write offs even include your kids clothes, if they wear them on 'the farm'. you can pay your family and/or kids and write it off. on and on.

do not let anyone convince you to be a hobby farm if you feel you will qualify for a true farm. that is a one line write-off with limits.

 

[Mac in Wisco]

The IRS has a number of rules on this for income tax purposes. First, you must be engaged in business for profit. If you do not run your operation in a business-like manner or do not intend to make a profit then they classify it as a hobby. You cannot post a loss year after year and deduct that loss from your income at a regular job. They expect you to post some sort of profit at least three out of five years, if not they have a few other tests to determine if it actually is a for-profit enterprise.

As far as property tax goes, it would depend upon where you live. Do a Google search for your state and "property tax credits". Most states give some kind of credit to agricultural enterprises, but usually specify a minimum acreage and may require that the land be used in a for-profit enterprise, much like the IRS rules for income.

 

[greyfields]

The "tax break" is on your property taxes. You should get a largely reduced rate for your property (excluding the value of your house and property on which it sits). If you are not getting it already, you'll need to see your County Assessor.

As stated above, though, you cannot be a hobby farm. You must run your business professionally, pay appropraite taxes and licensing feeds. If you do not show a profit in the first three years, expect to get a reaming audit. If they find you to be a hobbiest, you will get hammered for all back income taxes.

"Selling one egg makes you a farm" seems flippant and asking for trouble.

 

[Mac in Wisco]

Quote:
That's not quite right, it depends upon which accounting method you are using. Also under "Items Purchased for Resale", it specifically talks about chicks and pullets for egg laying and it says that you can deduct them in the year purchased as long as you are consistent with your accounting methods and not trying to pull a fast one on the IRS.

 

[miss_jayne]

Quote:
That's not quite right, it depends upon which accounting method you are using. Also under "Items Purchased for Resale", it specifically talks about chicks and pullets for egg laying and it says that you can deduct them in the year purchased as long as you are consistent with your accounting methods and not trying to pull a fast one on the IRS.

you are correct.

 

[cheapcheap_jeepjeep]

I wish I could use this farm tax deal. Wonder if it works for feed ,shelter cost ect.

 

[billiebrat]

Claiming a farm with the IRS can be very tricky and involved. One of the biggest things is it cannot be for a hobby it must be to make a profit and personal use must be taken into consideration too. I file several farm returns every year and the IRS is pretty picky about them.