Farm start up

[carolf]

I have two clients in the same situation. Both clients built greenhouses in 2014 and got them ready for planting. They both received their licenses to grow in 2015, one in January and one in March. Both are partnerships with capital contributed in 2014.

Any thoughts on when the business begins? My thought is 2015.

Should I start depreciating the greenhouses on their 2014 return and start up expenses on the 2015 return or should it be 2015 for both?

If I report everything in 2015, what does the 2014 return look like? $0?

Thank you for your input .

[Gretel]

It's not just the year you have to determine, it's the actual start of the biz. I am saying that because if any other expenses were incurred other than the greenhouses they would be start-up expenses before the start of the business. I would you the time when planting begins as start date but I am sure there are other opinions about this too. This biz start date will also be the date you start depreciating.

[carolf]

Yes, they have costs in preparing the soils, etc to get ready for planting as soon as they received their licenses. They have also been creating relationships with retail outlets.

Complicating matters is that they are both marijuana grows, so we'd like to allocate as much as we can to inventory costs rather than start up costs. I think that determining the date of start of business will impact how much of the expenses we can allocate to inventory.

I've been reading various Tax Court determinations regarding start of business and nothing is really set in stone. I know, facts and circumstances...

Thoughts, opinions?