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The owner may want to check the state's labor laws regarding owners & managers taking a portion of employees' tips.

It's been a hectic day and I failed to inquire about insurance but planned a follow up. Yes they had insurance which will cover a substantial part of this which makes my job much easier. If it covers most of this I can simply credit it to repair expense. I am running into an unusual number of sticky wickets this year. They did buy a number of new appliances which will take five year schedules. The insurance payment may eliminate a huge chunk of my problem.

If the LLC elected S corp status, the owner could be on payroll but if it's a Sch C, @Lee B is correct.

No, the tips received by the owner should be added to the LLC's sales revenue.

Especially Judy!

The owner should check his state's labor laws and discuss it with a labor attorney licensed in his state.

Yes that would be a real problem in my state!

Wrap your arms around a list of depreciable assets. Farm equipment is expensive and depreciable. Also breeding cattle are depreciable if they were paid for. A bull is nearly always paid for because a calf raised to be a bull will have cross-breeding problems and can sire out very sickly calves. Farmers have some advantages with respect to treatment as a "hobby" that other businesses don't have. To begin with, IRS will be deliriously delighted when farmland is ultimately sold. as the gains can easily eclipse the total of all previous losses. Also a landowner must do something productive on his land or else it will grow up in ruins and barns will dilapidate. (Timer would be an exception). And there is also the profit motive. A "farm" with 8 acres and one cow is a hobby. Make sure all income is reported. Payments of $7000 for feed and only $1500 in calves sold is a warning sign, unless the calves are being held over the winter for sale in the spring. This practice is not very common since it is horribly uneconomic to keep livestock in winter months. I do around 25 farms in Tennessee every year. Most of them do have losses that i feel are legitimate, and some have profit. Some of them have small losses and occasional profits. Many of them move from losses to profits when their expensive equipment becomes depreciated.

For K-1s from estate 1041s, it is the trust year-END that is within the individual's tax year that dictates what year to report on the individual's return. In your client's case, the K-1 year ended on July 31, 2024 so the activity from the K-1 flows to the individuals 2024 return.

it is a 2024 income item.

But, when you go to the backup function there is no way to select all returns, so it's pretty useless. It's also why so many choose export instead, because with export, you can select all returns.

Thanks @DANRVAN That is helpful. If I understand them correctly, they purchase and raise for sale. He said something about how he stopped working with heifers because it was too much work. What I am most interested in is how you value for inventory. I have been reading about the farm price method and the unit price livestock method. I need to get a handle on those methods and how to value using either. Wife mentioned something about how the prices being high made her have to increase the inventory, so I need to figure that out. Family has been in the cattle business for generations, trimmed their herd a couple years ago like many other ranchers when feed cost went through the roof. I am not concerned with hobby, but thanks for pointing that out. I am reading, but I don't feel like I am getting smarter. Tom Longview, TX

That depends on if they are held for market or breeding. Raised livestock do not have any basis whether held for breeding or market. LIvestock purchased for breeding are depreciated. Livestock purchased for resale are inventory. Sales of raised breeding stock go on part one of 4797 and are capital gains. Sale of purchased breeding stock go on part three of 4797 and subject to depr recap. Those two statements lead to the possibility of a hobby versus business. Proceed with caution!

If they have done their own in the past with TT, then make sure they get you a copy of their depreciation report. Ughhh !! Seems when we pick up new farm accounts its always the ones with hundreds of assets to enter. That first year is always a pain.

Good luck with that. I have a client who just recently received his 2022 Federal tax refund. We played every card that we could, but they move at their own pace. Due to recent news, that pace may slow down considerably.

I certainly need to add....."What would we all do without Eric?"..........and Judy!!!!!

Judy is spot on with the PA wages. Drake always populates the state wages from box 1 of the W-2. I almost got caught one year for not looking at the PA wages so be careful. While the software is designed to make our lives easier, it can definitely make it miserable if you don't double check yourself.

Yes, that is correct. VA Code § 58.1-499, see section D