Schedule F with no income in 2017

[origun]

Taxpayer has raised cattle to sell at auction for several years. However, in late 2016 he had a stroke and has not worked at all in 2017: no animals and no income. However, he has expenses that he would like to deduct. I have talked him out of most of them but have 2 things I'm wondering about. He lives in a desert so has irrigation rights and significant irrigation expenses. If he doesn't use his irrigation rights for a year he loses them...and they are very valuable in a desert. He would like to raise some cattle in the future (perhaps wishful thinking!) so has paid the expenses to maintain irrigation rights and keep his pastures irrigated. Could he claim this expense (about $2000) for 2017 even with no income?

Also, he has been depreciating some small equipment and has some depreciation left for 2017 (about $800 worth of 7 year property). What should I do with this? He still owns the equipment and would like to use it in the future but it wasn't used productively in 2017.

[ATSMAN]

From a realistic perspective how likely is it that he will get back to farming and raising cattle in 2018 or 2019?

I would take the irrigation expense in the current year that it is paid. For depreciation I would most likely suspend it and if he is not back in business and has had less than 50% use, you have to think about personal use or disposal!

[origun]

Thanks for input

I'll take your advice and deduct the irrigation expenses for 2017 but tell clients that if don't resume farming, that is the end! I will suspend all depreciation. I haven't met the stroke victim, only the spouse, but I get the impression that his days of productive work are probably over.

[taxea]

If it was not a working asset for 2017 I would not take the expense but rather, suspend the Sch F for a reasonable amount of time or take everything out of service so you don't have to amend returns when you find out he hasn't done anything.