single purpose ag structure

[sdtaxman]

Have a client that is building a sheep feeding barn. The barn will have watering facilities inside but the feeders and additional waterers will be outside on a 50 foot extention of concrete the lenght of the building. Would this qualify as a single purpose ag structure?

The code describes the single pupose ag structure as any enclosure designed, constructed and used for housing, raising, and feeding livestock.

I beleive that this would qualify under that explanation however, remember something from the past that stated if it could be used for something else then it didn't qualify. I am sure if the client decided not to buy sheep and feed them, the open space could be used to store hay or something.

Any experiences or thoughts on this are greatly appreciated.

Thank you.

[erchess]

I have no idea

but I'm bumping this back up to the top in hopes that someone with agriculture related tax knowledge may see it and answer. You might try a private message to thomtax or blackbart. I actually live in a rural area now but I go into the city for my clients.

[Jiggers]

Sound OK

Have a client that is building a sheep feeding barn. The barn will have watering facilities inside but the feeders and additional waterers will be outside on a 50 foot extention of concrete the lenght of the building. Would this qualify as a single purpose ag structure?

The code describes the single pupose ag structure as any enclosure designed, constructed and used for housing, raising, and feeding livestock.

I beleive that this would qualify under that explanation however, remember something from the past that stated if it could be used for something else then it didn't qualify. I am sure if the client decided not to buy sheep and feed them, the open space could be used to store hay or something.

Any experiences or thoughts on this are greatly appreciated.

Thank you.

While not familiar with sheep raising, I have several poultry farmers who have large poultry facilities that qualify.

The area outside may qualify as a feeding pen, subject to 7 years depreciation, versus the 10 years for the building. Your client would have to segregate the construction costs for this.

[TaxmannEA]

Definate maybe

The key to this is the phrase "single purpose". If the barn could easily be used for a purpose other than sheep raising, it may not qualify. The poultry facilities referred to are probably built with ventilation, feed and waste systems as an integral part of the structure, and therefore could not be easily converted to another use. Hog confinement facilities are built with slotted floors and manure pits to handle waste, low head clearence for climate control efficiency, feed systems built in , and ventalation systems as a part of the basic structure. These do not lend themselves to other uses without extensive rebuilding.
As an example, I built a cattle shed that is used only for housing and feeding cattle. It has a 10ft. head clearence and basically provides shelter. If I move the cows out, I can park tractors, store hay and feed,etc. without making any changes in the building. This is not a single purpose structure as it is suited for more than the one use, even though I only use it to house cattle.
If you use this designation, you need to document the reasons that the stutucture qualifies in case you are questioned by the IRS. Also, NEVER refer to a single purpose facility as a building. It's a structure, facility, etc. IRS examiners are great at semantics.

[Black Bart]

sdtaxman,

Have a client that is building a sheep feeding barn. The barn will have watering facilities inside but the feeders and additional waterers will be outside on a 50 foot extention of concrete the lenght of the building. Would this qualify as a single purpose ag structure?

The code describes the single pupose ag structure as any enclosure designed, constructed and used for housing, raising, and feeding livestock.

I beleive that this would qualify under that explanation however, remember something from the past that stated if it could be used for something else then it didn't qualify. I am sure if the client decided not to buy sheep and feed them, the open space could be used to store hay or something.

Any experiences or thoughts on this are greatly appreciated.

Thank you.

The wonderful thing about depreciation schedules is that IRS doesn't pay much attention to them -- you could set up a Chuckie Cheese and no eyebrows would raise. Seriously though, these cases always seem vague and amorphous to me. I've never 179ed a building (my clients prefer to count on that set amount of depreciation every year), but I'm interested in such.

IRS requirements:

(1) Exclusive use for permissable purposes -- You're okay there (raising sheep only) and I'm assuming inside feed storage is "incidental and subordinate" (must be less than 1/3 of total space used for that).

(2) Required equipment installed -- Also okay there (feeders and waterers put in).

(3)"Specific design for permissable purposes" -- In agreement with TaxmannEA's, this is your weak spot. I don't know about sheep; is the enclosed part of your building suitable only for them (like the pigs and chickens structures) or is it like his general purpose barn (cows can be immediately replaced by other livestock/equipment without modification)?

Regarding the open 50 ft.concrete slab (Equal size as main building? Canopy?); since it's suitable for other purposes, couldn't you say it's a separate structure and not part of the main building? Like Jiggers said, depreciate it as a feeding pen. That way you could avoid violating the no more than 1/3 incidental/subordinate use rule for the main building.

If it was arguable and needed for a good customer, I'd probably take a chance and deduct it.

[Black Bart]

Dear E C

but I'm bumping this back up to the top in hopes that someone with agriculture related tax knowledge may see it and answer. You might try a private message to thomtax or blackbart. I actually live in a rural area now but I go into the city for my clients.

Regrettably, I must forward a complaint re your above message to the politically-correct compliance arm of the local chapter of OAF (Offended Arkansas Farmboys). The rural stereotyping (assuming an innate familiarity with pigs, chickens, taters, and such) of Arkansans Thomtax and myself is simply unacceptable. Why, down here, the woods are full of astronauts and philosphers (more about this later -- right now I have to go fry somethin').