Start up costs for farm

[gmack]

Does anyone have a reference to the IRS definition of "year the active trade or business begins for a new farm?" Example: Tax payer registers trade name, purchases equipment, livestock (for production), feed etc. in October but does not generate any revenue until the following year. When did this farm business "begin?" and which year should those costs and expenses be deducted on schedule F?

Thanks

[Jiggers]

October. When you put the farm in business.

[gmack]

October. When you put the farm in business.

Thanks Jiggers... I assume that answer applies to all of the above? So schedule F can have zero revenue and no limit on expenses? (aside from the capialization rules on startup costs).

[Davc]

Not enough information. Did TP purchase stock of both sexes of breedable age? If TP bought calves to raise and breed then business hasn't begum yet.

[gmack]

Not enough information. Did TP purchase stock of both sexes of breedable age? If TP bought calves to raise and breed then business hasn't begum yet.

Sorry I wasn't clear on that. There will be no breeding. Also, livestock will not be purchased until next year when the farm is ready. All of first year expenses are start up. I know there are special rules for crops, livestock, feed, fertilizer, etc. I'm probably making this more complicated than it should be. I guess the basic question is, should a schedule F even be filed in the first year, considering that there are expenses but no revenue.

[Gretel]

I don't think the driving factor is the revenue, rather being in business. If being in business means to have livestock and no livestock is purchased yet, I am inclined to say farmer is not in business yet. If crops need to be sown and this is done, then yes, business has started.

[gmack]

This is why I am looking for an IRS definition. But let's assume that the criteria has been met and the farm IS "in business." Should a schedule F be filed in the first year if there are expenses but no revenue?

[Gretel]

This is what I would do and have done for Schedule C biz.