Hahn1040 Posted April 5, 2009 Report Share Posted April 5, 2009 I have never done a farm before. This year I have two clients who are "farming". the one owns land: 6+ acres. They pay someone to cut the hay. He keeps the hay for his own use. They pay $100 they hay is worth $300. Can this go on a schedule F? Can I use the interest and taxes on the land prorated for the percentage of hay land to total land? There is no building on the land- so does not qualify for second home. The other one owns land 65+ acres. He allows a farmer to graze his cattle. No money changes hands. The farmer does some work in return: repair fence/ cut hay. My understanding is that this goes on Sched E. Is it subject to the same passive activity rules as a rental house? His income is over $150,000- so no deduction for his two rentals. Quote Link to comment Share on other sites More sharing options...
zeke Posted April 5, 2009 Report Share Posted April 5, 2009 From data provided, Both "farmers" are in fact "hobby farmers". Neither has any indicated profit motive or realistic expectation of a profit. z Quote Link to comment Share on other sites More sharing options...
bstaxes Posted April 5, 2009 Report Share Posted April 5, 2009 Questions Farmer 1- He might be doing it for farm assessment taxes, then the farm land would have a separate tax bill (ask). What does he do with the hay? sell it, use it for his animals? $300 is not much hay, it is about 75-100 bales. If he is feeding his own animals (that are for profit not just pets) he might have a sch f. Farmer 2 If he were paid for his work (repair and cutting hay) he could use that to pay the rent for the pasture. You need more info. Quote Link to comment Share on other sites More sharing options...
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