Jump to content
ATX Community

Minimal Depreciation


Edsel

Recommended Posts

5 hours ago, Edsel said:

I congratulate you if you have your own farm operation and report a profit. 

Well, I could probably lose money if I had to have a John Deere with a cab and AC and a radio like my high maintenance little sister.  I'm good with being a sitting duck for hornets on my cabless Kubota.  She's the baby and always gets what she wants but I'm not bitter or anything.

In all seriousness, I have lots of grass thanks to my daddy, good fencing thanks to my farmhand kids, and cows that grow fat calves.  I am a lucky girl.

  • Like 3
Link to comment
Share on other sites

I'm afraid he also has some exposure with IRS.  Several years back, I remember IRS telling tax practitioners that many farmers were losing money year after year after year.  If I remember correctly, what they basically said was the tax practitioners could be held responsible for continually showing losses for a farmer(s) if it was common sense to said practitioners that these farmers were either involved in hobbies or plan out stretching the truth.  I was relieved as it gave me a way out.  One of my clients called several CPAs he knew personally before he left my office.  Each CPA repeated my feelings about these type clients.....go somewhere else. :)

  • Like 2
Link to comment
Share on other sites

10 hours ago, Cathy said:

I'm afraid he also has some exposure with IRS.  Several years back, I remember IRS telling tax practitioners that many farmers were losing money year after year after year.  If I remember correctly, what they basically said was the tax practitioners could be held responsible for continually showing losses for a farmer(s) if it was common sense to said practitioners that these farmers were either involved in hobbies or plan out stretching the truth.  I was relieved as it gave me a way out.  One of my clients called several CPAs he knew personally before he left my office.  Each CPA repeated my feelings about these type clients.....go somewhere else. :)

I absolutely agree that a preparer can get sanctioned in cases where an activity (not just farming) is clearly a hobby and you're writing off losses against other income.  (This is a general statement, and I think Edsel can argue effectively that this farmer is really involved in a farming trade.)  Clients don't know what they don't know.  We have a responsibility to explain hobby loss rules just like we have a responsibility to explain commuting miles and just like we have a responsibility to explain that you can't claim your sister's fourth kid on your return just because there is no benefit in sister claiming him.   Not just explain these things, but be the boss, don't allow clients to do what they want, do what is correct. 

One of the two I disengaged from this summer was not even a farmer.  He had a very dismal photography hobby.  He came to me new for 2016 prep.  Three previous returns had five figure Sch C losses.  I convinced him he had a hobby, printed articles and a tax court memo, and we filed correctly for 2016.  When he picked up, he remarked that we were counting the losses for 2017.  Well, you probably will, but Rita won't be doing it. 

Here's one article about preparer due diligence:  https://www.accountingweb.com/tax/irs/hobby-or-business-tax-preparer-due-diligence-part-1

  • Like 4
Link to comment
Share on other sites

22 hours ago, RitaB said:

Well, I could probably lose money if I had to have a John Deere with a cab and AC and a radio like my high maintenance little sister.  I'm good with being a sitting duck for hornets on my cabless Kubota.  She's the baby and always gets what she wants but I'm not bitter or anything.

In all seriousness, I have lots of grass thanks to my daddy, good fencing thanks to my farmhand kids, and cows that grow fat calves.  I am a lucky girl.

I did not know that growing grass was legal in Tennessee, lol.

  • Like 1
  • Haha 4
Link to comment
Share on other sites

Thanks for the various discussions.  I suppose time to put this thread to a merciful end.

I actually did get a couple helpful responses out of my original question as to how to reduce depreciation beyond the extent of alternative lives:

  1. Make sure the equipment has been placed in service.
  2. Reduce basis by a percentage of personal use.

Thanks to those who offered these suggestions.  Much more time was spent on the effect of non-election of bonus depreciation and the spectre of hobby losses.  The discussion was helpful.

And yes, one more thing.  Snow is rare where I live, but when I was young we got a dump of some six inches.  Even a half-inch paralyzes traffic, and Dad said absolutely NOTHING is going to get him out to drive in the snow.  Mom hollered "We're out of cigarettes!"  The result being Dad dresses to the max, cranks the tractor, and drives it 5 miles to the nearest open store.  Made a non-smoker out of me for life...

 

 

  • Haha 4
Link to comment
Share on other sites

12 hours ago, Edsel said:

I suppose time to put this thread to a merciful end.

 

Haha, that's funny because we don't operate like that around here and some members haven't even visited or read the post yet.  You'll have to get used to us being overly generous with advice and the fact that we do continue to discuss topics and offer opinions on subjects that interest us even if the original poster has received valid answers.   It only ends when the last member who wants to comment has done so.   Beside, I made some :pop:

  • Like 2
  • Thanks 1
  • Haha 2
Link to comment
Share on other sites

 

On 10/14/2017 at 5:52 PM, ILLMAS said:

Has anybody had a client that failed to take the proper or no deprecation at all, but the IRS recapture it anyway?

 

Not personally. I've heard of audits where the agent questioned the depreciation because of the underlying allocation of the basis between building and land that would affect the deductions.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...