Farm Depreciation

[Christian]

A well known local practitioner passed away last year in our area. A number of his former clients have called on me and while preparing one of those returns I noted on the depreciation schedule item listings for fertilizer, feed, and items I normally do not place on a depreciation schedule. I would appreciate any feedback on this as I have always expensed feed, hay ,and fertilizer in the year purchased. 

Edited March 31, 2015 by Christian

[Lee B]

Farming has special rules. You don't say what this farm produces, but in certain situations expenses are capitalized

until the crop etc is in production . Vineyards, Christmas Tree Farms, Orchards, Breeding Stock etc.

[Christian]

This is a simple side business farm. The owner has a regular job and basically raises a few cows from which he sells a few each year.

[RitaB]

I don't see any reason to depreciate those items. They don't have a useful life of more than a year. At least at my place they don't. Maybe the preparer was trying to be ultra conservative or something because he was nervous about a loss.

I have seen many strange things on depreciation schedules myself. If IRS is paying attention to those, I sure can't tell it.

[Lee B]

A well known local practitioner passed away last year in our area. A number of his former clients have called on me and while preparing one of those returns I noted on the depreciation schedule item listings for fertilizer, feed, and items I normally do not place on a depreciation schedule. I would appreciate any feedback on this as I have always expensed feed, hay ,and fertilizer in the year purchased.

 

Hmm, would the farm have shown a loss if these items were expensed ?

[Carolbeck]

A well known local practitioner passed away last year in our area. A number of his former clients have called on me and while preparing one of those returns I noted on the depreciation schedule item listings for fertilizer, feed, and items I normally do not place on a depreciation schedule. I would appreciate any feedback on this as I have always expensed feed, hay ,and fertilizer in the year purchased. 

Maybe Inventory to be Amortized?  Resale of farm produce?  Unusual to amortize items with less than 1 year life.  Could be did not want a loss as stated above.

[Christian]

My guess is that he wanted to take the costs in a later year. His farm returns invariably show a loss. He pushed the envelope with regard to losses or rather burst the envelope out on all sides. He charged large fees to his clients owing to his ability to get refunds. Little wonder he kept a jar of tums on his desk and smoked like a stack sadly passing on from lung disease and being grossly overweight.

[RitaB]

My guess is that he wanted to take the costs in a later year. His farm returns invariably show a loss. He pushed the envelope with regard to losses or rather burst the envelope out on all sides. He charged large fees to his clients owing to his ability to get refunds. Little wonder he kept a jar of tums on his desk and smoked like a stack sadly passing on from lung disease and being grossly overweight.

We got the same guy here. Tells everybody he knows all the loop holes, and they believe it. Takes forever to get a return done and people think he's slaving away over their very complicated return. I get somebody from him every year when they figure out they're not loop holes, they are tax laws, and there is no reason to pay twice as much and wait twice as long on your tax return. Walk in his office and your eyes have to adjust for the wood paneling and/or cigarette smoke. Hard to tell them apart.