Client started new biz as horse trainer and I was inclined to use Sch C but believe I need to use Sch F. He bought several horses in 2012 and sold all but one, which will be accounted for in inventory. Hay and grains purchased and consumed by this horse are part of inventory, right? What are considered incidental expenses? Are the shoes for the horse part of inventory or incidental? Other than that he just has general expenses and it is a tiny operation.
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Probably Sche F. See prior thread on this board, 2008, "Horse Training - C or F?" and Pub 225, page 26. Hay and grain purchased for feed are not inventory. Same for horseshoes, unless he plans on selling them. Inventory is items for resale. -
Jiggers or Snag
I will file Sch. F, it just feels right. I might be dense with the inventory thinking, maybe Jiggers can offer his opinion? If I compare the horse with a manufacturing business then all components will be part of the inventory. This is how I see the food for the horse. Another analogy is a car dealer. All direct expenses need to be added to the value of the car until it's sold.
This is from Pub. 225, which made me think the way I did.
Supplies. Supplies acquired for sale or that
become a physical part of items held for sale
must be included in inventory.Comment
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Don't point fingers at me! I still have this serious question. Of course feed is an item on Schedule F, no problems with the feed for for the horses sold in the same year. I also would not have a problem if the horses just grazed. Am I really that crazy even thinking it could be part of inventory?Comment
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