Experience F preparers

[Super Mom]

My experience with F is practically none. Can some more experienced pros explain to me 263A for farmers as you understand it. Mainly, how do you deprecaite those assets, is it subject to the 100% this year, and how do you alocate other costs like irrigation and fertilizer?
Thanks!!!!!!

[MilTaxEA]

You might want to consider purchasing CPE for farming. NATP has a new Schedule F book they released last year. Looking at the outline, it looks like it address many of the questions you have.

I've been really impressed with the quality of NATPs publications.

[WhiteOleander]

My experience with F is practically none. Can some more experienced pros explain to me 263A for farmers as you understand it. Mainly, how do you deprecaite those assets, is it subject to the 100% this year, and how do you alocate other costs like irrigation and fertilizer?
Thanks!!!!!!

I am not real familiar with this code section. I hope this link to the IRS works. It appears that the t/p can elect out of sec 263A.

http://www.irs.gov/businesses/small/article/0,,id=160015,00.html

Hope this helps

[Super Mom]

I am not real familiar with this code section. I hope this link to the IRS works. It appears that the t/p can elect out of sec 263A.

http://www.irs.gov/businesses/small/article/0,,id=160015,00.html

Hope this helps

Thanks for trying, they can elect out, however that subjects him to ADS and no bonus depreciation. When I show 263A costs as capitalized, concerned about how that goes on the return, allocating indirect costs, and what method of depreciation, is this subject to bonus?

[dan doshan]

You have probably noticed ... but Pub 225 deals with UNICAP rules for farmers. I looked and the Pub does not explain a great detail but does mention some things and references some other sources. I know I have had only one client that had to use this UNICAP stuff and found some information that more or less detailed or listed what expenses could be currently taken and what had to be capitalized. Unfortunately I do not recall where. Probably in some publication. I suspect current recurring expenses can be taken yearly. As I recall one could take or use section 179. Good Luck.

[dan doshan]

Got me googling Farmers and UNICAP. I don't know how anyone not really familiar with such things could even begin to understand just what and how to do it. Have an old Small Business Tax Book at home I just looked at and it has a chart in it on the various allocation of costs. How direct and indirect costs are inventoried. Don't know if the newest version has such.

[S T]

Got me curious also, I don't prepare farmers (only the ones through Farm Mgmt or K-1 forms) So probably not going to be of much assistance, other than "thoughtful suppot"

So all I can do is post what I found which might not be relevant to your situation - so maybe more reading to apply to your T/P situation and maybe I posted something that a prior response did not post or something you have not read yet, or just posted a link that will not really apply.

Not much help - other than some "links"

http://ezinearticles.com/?Unique-Tax-Rules-For-Farmers-and-Ranchers&id=4906828

http://www.taxalmanac.org/index.php/Discussion:Unicap_rules_for_Schedule_F_animal_inventory

http://www.irs.gov/businesses/small/article/0,,id=160015,00.html

http://www.irs.gov/pub/irs-lafa/102602f.pdf

Seems like some of us posters are weak in this area - so would be good if you post back what you actually find and determine - You are somehow i think going to be the "aurthority" on this subject matter, when it is all said and done.

Good Luck, and several of us are here for you.

Sandy

[outwest]

Here is a very concise IRS summary

that I think will help.

http://www.irs.gov/businesses/small/article/0,,id=159997,00.html

[Super Mom]

My newest question, how to amortize these costs or is this considered inventory?????

[Super Mom]

NOW I'm really confused!!!!!

Ok, I found a worksheet in the taxbook to help me allocate indirect costs. I know the 263A costs being capitalized goes on line 32 as a negative number increasing income, I was assuming that the depreciation would then cover that, however when I take out those costs that should not be expensed and capitilize them, the net income is just a wash!! Basically losing all that expense!! I know this can't be right, don't understand!

[Super Mom]

Help!

Ok, the only way this makes any sort of sense is to leave the expenses on the lines, subtract them with a negative on 32 and then depreciate them. But that REALLY doesn't make sense either, just more sense than losing all of thoses expenses!

[Super Mom]

Oh, and want to say thanks for the help everybody!!! I definitely plan to take a course on F preperation this year for my continuing ed requirement. In the meantime, I've gotta finish this return!

[dan doshan]

My newest question, how to amortize these costs or is this considered inventory?????

I think the costs are inventoried. In the Tax Book chart isn't that what they are getting at. I know on the one UNICAP return I did for a couple of years we inventoried various costs. Although his situation was a little more clear cut then what I assume some farm operation would be. However, I do remember taking depreciation expense normally. Don't know if that was right but couldn't figure out any other way to handle depreciation.

In 12 years or so I have only turned down 2-3 client returns where I just did not feel comfortable doing even after spending several hours doing various research on. Situations where I thought the client would be better served by someone that had a much better handle on their situation. Not saying you do not ... just that maybe this is one you may want to pass on. If for no other reason then your own peace of mind.

[Super Mom]

Thanks, I may have to let this one pass, but I hate to do that because I've got lots of time and LD calls tied up in it. But maybe that is the best advice to give him. I don't think in the situation of farm costs it's considered inventory although I noticed the form in the taxbook was for that. I just thought I'd use it for allocation of indirect costs. Thanks for your help and time!!!

[Super Mom]

Just moving back to the top! Hate to let this one go, but may have to.