Tax implications for starting an orchard

[EddieWalker]

This sounds like something Eddie isn't familiar with, or maybe it was just a rhetorical question. The 'you pick it' places are fairly common around southern Indiana. You can go and pay to pick about any kind of fruit or vegetable you want within about 2 hours of my house. Melons, tree fruits, strawberries, green beans, grapes, whatever you want.

Do they not have these kinds of places in other parts of the country?

I've never heard of a vegetable or fruit type of place where you pick your own. It could be just that I'm sheltered and never came across anything like this. I am impressed that people will drive two hours one way to do this.

There is a Blueberry farm in my area and they sell allot of Blueberries. It's a family operation and they've been on TV a few times. They make jams and jellies, plus all sorts of other Blueberry stuff. I don't know if you can pick your own, but you can get just about anything Blueberry from them. The store if very nice and it's an attraction in itself. I've thought about going there a few times, but haven't made it yet. They do have me curious.

Eddie

 

[smfcpacfp]

As someone said the the 2 of 5 rule isn't a definitive rule. Actually it relates to the burden of proof. If you have a profit in 2 of 5 years there is a rebuttable presumption that you have a business and it would be up to the IRS to prove that it is, in fact, a hobby. If you don't have a profit in 2 of 5 years, you must prove that you do have a business.

Obviously a business that takes 5 to 7 years to develop a revenue stream would be a case where you would not be expected to meet that 2 of 5 rule. It also doesn't allow you to automatically deduct expenses without any IRS recourse. They would likely ask you to extend the statue of limitations on the determination as to whether you will ever be able to deduct the losses. In other words you may have to give back the tax benefits you derived in years 1 thru whatever, if the activity is deemed to be a hobby in the end.

 

[MossRoad]

I've never heard of a vegetable or fruit type of place where you pick your own. It could be just that I'm sheltered and never came across anything like this. I am impressed that people will drive two hours one way to do this.

There is a Blueberry farm in my area and they sell allot of Blueberries. It's a family operation and they've been on TV a few times. They make jams and jellies, plus all sorts of other Blueberry stuff. I don't know if you can pick your own, but you can get just about anything Blueberry from them. The store if very nice and it's an attraction in itself. I've thought about going there a few times, but haven't made it yet. They do have me curious.

Eddie

Eddie,
In the county just north of me across the Indiana/Michigan state line there are at least 31 you pick fruit farms. The most famous is Home. People drive all the way over there from Chicago and pay crazy prices for the "experience" of picking their own fruit and cutting their own Christmas trees.

They hold the world championships of cherry pit spitting every year. International Cherry Pit-Spit

Check out this website for a pretty good list of you-pick places by state.
Where to Find Pick-Your-Own Fruit and Vegetable Farms / Orchards for Local, Fresh Fruit, Vegetables and Pumpkins, Along With Canning, Freezing & Preserving Instructions!