I have a client that raises cows on her land only to meet the requirements for a property tax deduction. Are the hobby rules the same for any kind of venture?
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Yes, they apply to hobby farms. -
So any sales of cows is going to be line 21 and expenses on sch A not to exceed income?Comment
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For What It's Worth
There are laws giving relief to farm production in many states - in my state they call it the "Greenback" law.
A farm with only two cows is probably just a hobby. However, 1 cow for every 4 acres of pasture is easily supportable as to intent if there are more cattle than this. Even if farm consistently shows a loss.
"Purists" among IRS and/or publications insist a farm cannot consistently lose money, but history and appeals are different. When many of these farms were purchased there was every intent to make a profit and even today, the price of calves is so high that some of my farmers are really making decent money.
I would say that if these cows were bought simply to take advantage of such a Greenback assessment, then it is a hobby. And you are correct, the revenue goes on line 21, and expenses are misc itemized deductions subject to the 2%. A rip-off because this treatment almost always assures taxation. It's bad enough not to allow a loss but worse still for a taxpayer to pay tax on a hobby.Comment
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