Discussion:Palm trees, hobby rules? or long term capital gain
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| I think if the man is in business, he knows it. He acts like it. Keeps good records and practices good husbandry. Buys books, advertises. He doesn't play on his farm, or wear a big cowboy hat and ride around in jet planes, or 3 wheelers. | I think if the man is in business, he knows it. He acts like it. Keeps good records and practices good husbandry. Buys books, advertises. He doesn't play on his farm, or wear a big cowboy hat and ride around in jet planes, or 3 wheelers. | ||
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Revision as of 15:34, 7 November 2009
Discussion Forum Index --> Advanced Tax Questions --> Palm trees, hobby rules? or long term capital gain
Discussion Forum Index --> Tax Questions --> Palm trees, hobby rules? or long term capital gain
| 6 November 2009 | |
| I will just get right into it.
4 acres of land dedicated to agriculture through the county. 1,000 palm trees were planted this year and are not expected to be available for sale until 6 years later. There were lines put in for irrigation, a pond was dug for retention of water, fertilizer, trimming ect... This is an every year expense being incurred but no return on the investment until the 6th year. I believe if it was handled as an income generating business then it would fall in the category as a hobby. This is not a nursery nor is there any other plants for sale. The time spent on maintaining the plants is minimal. My thoughts are that this would be a long term capital gain. Divide all of the expenses incurred over the years by 1,000 to figure the cost per plant and list the sales price as the price that it sold for. Any thoughts? | |
| 6 November 2009 | |
| I think it depends on the palm. Like, is it a date palm? Then, you'll have dates. Coconut palms, you have coconuts (and OSHA claims).
So, it depends on what kind of palm it is. Your crop will be income if it puts out a crop. So, is he growing it as trees to be cut, or as a producer of a regular crop? Think about the guy who grows asparagus. It takes three years to produce your first crop of asparagus, but after then, it keeps producing forever. How would he handle that? You got me thinking. It takes 400 years to grow a bonzai tree. I have no idea what you'd do with that one, but I know they sell them. I think if the man is in business, he knows it. He acts like it. Keeps good records and practices good husbandry. Buys books, advertises. He doesn't play on his farm, or wear a big cowboy hat and ride around in jet planes, or 3 wheelers. | |
