Quote:
Originally Posted by scambo1
I've had a farm for a number of years now. It is generally good for 70k right off the top without using the section 179 expense. Section 179 maxes out at an annual ~$180k/yr. in itself. I don't live there any more, but keep it for the tax benefit. The schedule f (farm) is powerful. It gets you depreciation, section 179, related fuel, oil, tools etc.
It takes about a year to be recognized by your state as a farm once you get the ball rolling. There is a minimum acreage size and a minimum acreage for the farmed product.
Front page write downs on the 1040 is how you limit your tax liability.
The acreage could be swampland at $500/acre, but gives you the same tax benefit as a vineyard in Napa.
The above is not investment or tax advice. Dyodd
I own one company and 50% of another. My LLC that I own 50% of is the family farm. (My dad owns the other half). I've had three accountants look over my taxes to try and manage them. After three years of losses the IRS can come in and designate your business as a hobby if it is not generating a profit. This will limit your deductions to something like $2000 per year. They usually won't bother you until 5 years. So this may work for a few years, but eventually you have to make money.
Here is a good article that explains the basics of using a farm for tax purposes.
http://www.hobbyfarms.com/farm-marke...xes-14991.aspx
The only real way to have long term tax relief is to not get paid via W-2 wages like the really wealthy people do. With the current tax code it gets tough to hide money every year with a side business when all that business is doing is creating expenses to offset your W-2 wages.
Maybe I just have bad accountants, but side business won't help you hide income for very many years. My problem is both my business are doing great so now I've got that to deal with. 1st world problems.....it's tough I tell ya.
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04-22-2020
