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#67827 - 04/27/05 12:49 PM Tax break for egg "business"??
Tucson Chickens Offline
Flock Leader

Registered: 09/07/04
Posts: 320
Loc: Arizona
My husband and I were trying to figure out (prior to April 15th) if we could get a tax deduction for a portion of our chickens since we sell the eggs. We are not a "business" but are investigating a business license or vendor fee. Does anyone do this? Can we deduct part of the yard/house with the chicken yard/coop? Computer/advertising? Feed/cartons, etc.? Thanks.

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#67828 - 04/27/05 01:22 PM Re: Tax break for egg "business"??
Rob2 Offline
Classroom Professor

Registered: 03/28/03
Posts: 3068
Loc: Pennsylvania
You have to be a bonafide business. The business can be set up in several ways: sole proprietor, partnership or corporate. each has advantages. You need to have discussions with an accountant, it may not be worth the time and trouble. There are certain advantages and some disadvantages to making a hobby a business. If you have under a couple hundred hens and no other farming enterprises you are best to pocket the cash and keep it simple.
We have run a farm business, and several others including a gun shop & a retail/wholesale beer distributor. Our farm was the least profitable and we lost money at it for over 20 years but the tax advantages kept us at it. It was actually a profitable enterprise(in the pocket) but lost money after depreciation and etcetera. You must remember that what ever breaks you take now, you will pay for later.
I had tp return over 14,ooobucks I had taken in capital gains on the beer business(only 8 years in business) and if I sell any farm equipment I would have to pat those capitall gains too, so that stuff will rot here!

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#67829 - 04/28/05 12:10 PM Re: Tax break for egg "business"??
J. Henderson Offline
Coop Keeper

Registered: 08/16/02
Posts: 674
Loc: New York
You don't have to set up a business to file Schedule F (Form 1040) for profit or loss from farming. You might look at the Farmers Tax Guide from the IRS http://www.irs.gov/pub/irs-pdf/p225.pdf
for additional and authoritative information.

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#67830 - 04/28/05 02:53 PM Re: Tax break for egg "business"??
Smoky73 Offline
Coop Keeper

Registered: 01/14/05
Posts: 697
Loc: Colorado
Correct Jhenderson, I work for an accountant. Now while all states are different, I filed a Schedule F for profit or loss of farming. I usually owe a bit every year, but I got back some this time. I used the following for deductions....
feed bills
incubator receipts
medications
bedding and equipment
website cost
supplies to build housing, fencing..etc
new stock...eggs bought, started birds....etc
egg carton receipts
shipping costs
entry fees for shows or club dues

for sales, I do anything that I do not receive cash for, examples are paypal transfers when people buy eggs or birds from me on line, or any checks I receive. I also sell goat kids when i get them, but thats only once a year. I do not include egg sales for eating eggs as that is always cash. If you feel like making out receipts...you sure could do that too.

A thing to remember is that if after a few years, the IRS might say you cannot keep claiming your birds costs if you do not start showing a profit of some kind, even if it is only $5.00. Just probably dont add ALL your expenses for one year. I was told by my boss, here in Colorado, you should show a profit after 3 years.
_________________________
Cara Smith
http://www.silverpulletpoultry.net

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#67831 - 04/30/05 05:35 AM Re: Tax break for egg "business"??
J. Waller Offline
Coop Cleaner

Registered: 04/16/04
Posts: 158
Loc: Minnesota
I sell eggs, broilers, home grown beef and veggies. Also rent out the farm and one confinement barn to dairy farmers. Do the Schedule F-used to farm fulltime but all equipment is depreciated out.

I do claim all eggs produced as income-keep track of daily production and use that number x $1/dozen so I claim income on eggs used in the house or given to family. Do the same with broilers and beef. Enter it as "home use" for farm income.

There are other deductions such as paying children for farm labor and using that as an expense. I did that (legitamately) when farming fulltime and kids had their spending money-which they actually earned!!! No kids at home anymore but I wouldn't do that on my present operation anyway. When I was farming fulltime the kids actually did work-good for them, too. =)
_________________________
J. Waller

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