Discussion Archives:Farmers - ownership, forms, disability

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Discussion Forum Index --> Tax Questions --> Farmers - ownership, forms, disability


RSRAGENCY (talk|edits) said:

15 March 2007
New client, brought in last 10 yrs. of taxes. Sch-F on everything shows a loss. Husband now disabled due to stroke. First question.....how long can they keep claiming a loss?? #2, should farm now be operated by Spouse? #3, Should Form 1065 be prepared in lieu of Sch-F?

Seems to me the "Farm" (cow/calf pairs) was/is just a 'hobby'? Both taxpayers had 'real' jobs the entire time.

Laticiaw (talk|edits) said:

15 March 2007
Why would you set up an LLC for that?

Laticiaw (talk|edits) said:

15 March 2007
Or Partnership...

Sorry, I'm really tired right now and I see 1065 and think LLC...why prepare a separate return for that? It still is going to flow through the return via the K-1.

RSRAGENCY (talk|edits) said:

15 March 2007
When I entered the info from 2005 and 'transferred' all into my 2006, (ProSeries)for whatever I need for this year's data, I ran a quick check to see what else I would need, and ProSeries gave me a diagnostic error stating that the IRS is now looking for 1065 in place of the Sch-f for jointly held Farms....

Deback (talk|edits) said:

March 15, 2007
Did you check the box on Sch F that says both spouses work on the farm? If so, uncheck that box and show only one spouse as the farm proprietor.

RSRAGENCY (talk|edits) said:

15 March 2007
On the phone, as we type. Just what I was hoping to do.. especially since husband is disabled..

Thanks much!!

Deback (talk|edits) said:

March 15, 2007
Your software knows about the new rule that says husband-wife partnerships are required to file Form 1065. This applies to Sch F and C.

RSRAGENCY (talk|edits) said:

15 March 2007
This is only new for 2006 . I feel OK changing from both to just spouse, as husband IS honestly disabled now. What I don't feel comfortable with is telling them they owe over $11,000 on fed alone because husband took out ALL pensions, paid NO taxes and 'left' home....mid-life crisis??? Maybe the stoke isn't real?? I've never seen him....is he really there??? She only dropped off the papers....when she hears about the bill, she's liable to..........(I'm sure it's all true (poor guy)....but this isn't a pretty picture....Maybe they'll only use me this year>>>>>

LoisR (talk|edits) said:

7 June 2007
At what level of involvement does a farm become a hobby? I have a client that has a full time job but bought a house with 9 acres to farm and wants to take losses. Anyone know any IRS reference codes so I can talk him out of this?

Smog (talk|edits) said:

7 June 2007
Look at hobby loss rules - books kept, runs like a business, professional help with farm budget, keep hours worked on farm, etc.

I would have a problem of having a farm with only 9 acres. Somebody probably could but not around here.

I had a potential client who bought 50 acres and a house. He paid $10,000 an acre (all borrowed money at 7.5%). He wanted to have about 15 head of cattle. I told him that the IRS agent would never let this be a farm because there was no way he could ever make a profit (50 acres x $10,000 x .075=$37,500 in interest). He walked.

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