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  1. #1
    Veteran Member
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    Default Starting a hobby farm. Questions Questions!

    Hello,

    So I own around 6 acres. And have access to 15 more. I'm very intrested in starting a hobby farm (truck farm). Here's some questions I have and thought other may have some good answers.

    1. What is the min acres required to have "farm status"?

    2. If I start a farm can I get tax credit etc? When if ever do I need to show a profit?

    3. What cash crops, services, etc would be good to sell? I'm not intrested in livestock.

    4. Can I deperciate equipment I already own?

    These are just a few of my questions. Maybe someone knows of a good website that discusses this. I look around some but didn't find much. Thank you for the help! )

  2. #2
    Elite Member whistlepig's Avatar
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    Default Re: Starting a hobby farm. Questions Questions!

    If you have a small farm and you are paying taxes on income from this farm you certainly do have the right to claim some deductions. But you have to be careful. There are what our accountant calls "gray" areas on deductions. He says to stay away from these "gray" areas. It's best to have a CPA set your taxes up on this. At least starting out.
    ........Shoot this thang! Have mercy this thang is killin' me. Just shoot up here amongst us. One of us has got to have some relief..............
    jerry clowers-a coon huntin story.

  3. #3
    Member
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    Winchester, Ohio
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    1964 Massey Ferguson 175

    Default Re: Starting a hobby farm. Questions Questions!

    It depends alot on your state. I would talk to your local AG office.

  4. #4
    Elite Member AlanB's Avatar
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    Clarksville, TN, USA
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    NH 1925

    Default Re: Starting a hobby farm. Questions Questions!

    I have no good direct answers for your questions, especially as they vary in different regions, states, and in respect to whom is asking.

    Question 1. Depends what you mean by "Farm Status" and who's rules you are trying to play by? USDA, IRS, your state Tax office, your states extension agent, Green belt (in my area)

    Question 2. If you do not show a profit at some point the IRS (which is what I am assuming you are looking at) will start to tell you that you have a hobby, not a farm. Exactly where that is I have never seen written that I believed to be gospel (Even the IRS helpline is only right 70% of the time and if they tell you wrong, you are still responsible)

    3. The crops, or such that do well in your area that you are willing to take the time and effort to grow and market is what works. Again, how much time effort and money do you expect to put in to this endeavor and what are you looking at for returns?

    4. This gets to be a convoluted question that comes down to the answers below. You want to be careful as you depreciate things and put them "into" your "business" as then they are an "asset" of said business and dependent upon local laws etc, interesting things start to happen (such as in my neck of the woods county and state can (does) tax me on the assets of my business)

    So I think a better answer to your questions would be.

    Need to give us a hand and tell us where you are so that we can give reasonable and rational answers. The laws in California are very different than TN and forget it if you are in Germany.

    My Strong, STRONG, really strong suggestion is to sit down with a CPA in your area, familiar with Form F (Farms) I can think of few worse feelings than opening that letter that said we are being audited.

    If you were in my area, I would suggest having a sit down with the county extension agency, and the Zoning and codes folks and get their inputs. I am sure there is something similar if not exactly named the same in your area. We also have the master gardener program in our area (under the extension agency) that can be a wealth of info. Again in my area, the local co-op, or Southern States (KY co-op) can be a real help as far as the what works good or pointing you to folks doing similar operations.

    Good luck We eat a bite or two of the elephant every day and try and stay up with it and every now and then the elephant sits on us

  5. #5
    Gold Member dmay's Avatar
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    Default Re: Starting a hobby farm. Questions Questions!

    Quote Originally Posted by PapaPerk View Post
    Hello,

    So I own around 6 acres. And have access to 15 more. I'm very intrested in starting a hobby farm (truck farm). )
    A truck farm? Planning on planting and raising Dodge RAM or F150's?

    Typically you need a minimum of 5 acres to enter hobby farm status. I suggest you find someone in your area that does hay. Grass is a good cash crop to grow and bale for horses. Specially when your neighbor uses his equipment to do the work and you just rent the land.
    .
    Darrell

    JD2320, 200CX, 53" Bucket, 54" QH SnowBlower, iMatch, Ballast Box, LR1072, RC2048, GM3060, 647 Tiller, SS1023B

  6. #6
    Elite Member whistlepig's Avatar
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    Default Re: Starting a hobby farm. Questions Questions!

    I hate to say it but AlanB pretty much summed it up. You have to negotiate your tax status with the county, township, city, state, and federal. What ever applies to your location and situation. I think all of us that have small hobby farms have done this. I have done this. We have been claiming deductions on a hobby farm for decades. Then we moved 4 years ago and had to start all over again with a new county and township. Things here are totally different. It is worth the time and effort. It will save you some tax dollars and keep you legal. But, again, I would highly recommend a CPA to get you started up.
    ........Shoot this thang! Have mercy this thang is killin' me. Just shoot up here amongst us. One of us has got to have some relief..............
    jerry clowers-a coon huntin story.

  7. #7
    Silver Member JakeBrake's Avatar
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    Default Re: Starting a hobby farm. Questions Questions!

    Quote Originally Posted by PapaPerk View Post
    Hello,

    So I own around 6 acres. And have access to 15 more. I'm very intrested in starting a hobby farm (truck farm). Here's some questions I have and thought other may have some good answers.

    1. What is the min acres required to have "farm status"?

    2. If I start a farm can I get tax credit etc? When if ever do I need to show a profit?

    3. What cash crops, services, etc would be good to sell? I'm not intrested in livestock.

    4. Can I deperciate equipment I already own?

    These are just a few of my questions. Maybe someone knows of a good website that discusses this. I look around some but didn't find much. Thank you for the help! )
    1. IRS Schedule "F" does not ask for the size of your farm. Around here virtually all rural land without buildings, regardless of size, is classified as "cultivated" or "uncultivated" (forest).

    2. For many years IRS guidelines have stated that most for profit farm operations must show a profit in 3 out of 5 years. If you can't do that then you become a hobby farm. Horse breeders get a somewhat better deal, but I can't remember the exact details.

    3. Unfortunately, I can't offer any advice on profitable farming.

    4. You can depreciate equipment you already own, but that is probably more trouble than it worth.

  8. #8
    Silver Member
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    Default Re: Starting a hobby farm. Questions Questions!

    What kind of tax credit are you looking for? You don't just get a credit for farming. You deduct money you spent trying to make the money farming.
    You sure you don't want tondeal with live stock. Good money in meat goats and stocker calves. But if your sure then produce and hay is my next suggestion. You can sell either all different kinds of ways. Hay sells good in the paper on with a sign on side of the road. You sell produce at fea markets, farmer markets or to mom and pop stores.
    Its alot easier to ask a stupid question than fix a stupid mistake:
    1997 JD 5300 w/ 540 LDR, MX6 cutter

  9. #9
    Elite Member whistlepig's Avatar
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    Default Re: Starting a hobby farm. Questions Questions!

    Quote Originally Posted by JakeBrake View Post
    1. IRS Schedule "F" does not ask for the size of your farm. Around here virtually all rural land without buildings, regardless of size, is classified as "cultivated" or "uncultivated" (forest).

    2. For many years IRS guidelines have stated that most for profit farm operations must show a profit in 3 out of 5 years. If you can't do that then you become a hobby farm. Horse breeders get a somewhat better deal, but I can't remember the exact details.

    3. Unfortunately, I can't offer any advice on profitable farming.

    4. You can depreciate equipment you already own, but that is probably more trouble than it worth.
    JakeBrake is correct here. A profit in three years out of five. That's not not just the first 5 years. These are running years. Better to set up at first as a hobby farm and then ease your way in to the full time farm deductions. Going backwards from a full time farm to a hobby farm can get ugly with the IRS. At least that is what our accountant told us. The IRS will go back on all the time claimed as full time farming.
    ........Shoot this thang! Have mercy this thang is killin' me. Just shoot up here amongst us. One of us has got to have some relief..............
    jerry clowers-a coon huntin story.

  10. #10
    Elite Member
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    New Holland TC-45

    Default Re: Starting a hobby farm. Questions Questions!

    Quote Originally Posted by PapaPerk View Post
    Hello,

    So I own around 6 acres. And have access to 15 more. I'm very intrested in starting a hobby farm (truck farm). Here's some questions I have and thought other may have some good answers.

    1. What is the min acres required to have "farm status"?


    2. If I start a farm can I get tax credit etc? When if ever do I need to show a profit?

    3. What cash crops, services, etc would be good to sell? I'm not intrested in livestock.

    4. Can I deperciate equipment I already own?

    These are just a few of my questions. Maybe someone knows of a good website that discusses this. I look around some but didn't find much. Thank you for the help! )

    Check with a local accountant or book keeper, they should have the information you need.
    From memory, you never have to make a profit, but IRS will really check you out and at some point in time will not allow some deductions.

    When you start your "business" declaire a value for any equipment that you already own. Then it depreciates from there.

    You don't have to have Acres" to be a "Farm", if you grow things to sell, that is a farm.

    Best Advice: And it is Free. Do your thing, grow and sell what ever you want. Keep the gov. out of it, end of worries. It is legal to have a "Hobby Business" and unless you make a LOT of money nothing has to be said.

    Have Fun
    Jim Crash325
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