Claiming a loss with the IRS

[DoubleR]

What is your experience on claiming a loss on schedule F? How many years in a row have you and have you ever been audited,etc?

I always heard it was 2-3 years but could never find it in writing anywhere. I even called down to Cincinnati at the IRS a few years back and still couldn't get a official answer from anyone. I have asked a couple of non farmer accountants who couldn't tell me. My Dad who was knowledgeable on tax laws back in the day claimed it was two years and then you had to claim it as a hobby but he's been gone for 12 years now so that was a while back.

 

[Texasmark]

Eighty-three and still plugging away. Impressive.

It hasn't been easy....Prostate surgery in 2022, Lymphoma cancer in 2013 and in a different place 2023, surgery and both cancers cured by Texas Oncology 25 miles from the farm, 6 ea once a month 4 hr sessions. Skin cancers keep popping up....had 2 removed from my neck about 6 months ago and one on my ear and fore arm recently, all removed by a clinic in the same smallish town....very fortunate. Sit here wondering what's going to break next.

i guess the farm keeps me active and that must help. I get bored so I always have to be doing something and as you folks know, with a farm there is always something that needs fixing. I wore out 2 women in my life and I'm not going for a third. I am getting used to living alone and cooking and kitchen chores are ok. Otherwise, the house is comfortable....only gets cleaned up (pretty much) when my daughter comes up to check on me.

I don't want to get much farther down the line. I told my daughter no nursing home for me and I don't want to be a bed ridden invalid or hooked up to a bunch of stuff.

Thanks for the boost.

 

[Keith Williams]

I always heard it was 2-3 years but could never find it in writing anywhere. I even called down to Cincinnati at the IRS a few years back and still couldn't get a official answer from anyone. I have asked a couple of non farmer accountants who couldn't tell me. My Dad who was knowledgeable on tax laws back in the day claimed it was two years and then you had to claim it as a hobby but he's been gone for 12 years now so that was a while back.

I believe the definition of a hobby activity was found in the instructions for Form 1040 Schedule C.

 

[Geo-TH,In]

What is your experience on claiming a loss on schedule F? How many years in a row have you and have you ever been audited,etc?

I hire my college friend to do my taxes. He's a CPA. And I don't pretend to be smarter than a CPA to hand out advice on taxes.

 

[Tx Jim]

I hire my college friend to do my taxes. He's a CPA. And I don't pretend to be smarter than a CPA to hand out advice on taxes.

So what does having a CPA fill out one's tax return having any bearing on jhwis's original question?? For what its worth I also have a CPA fill out my income tax return.

I think main difference is what % of one's income or loss is generated from being in agriculture. My income/loss is 100% agriculture related & I've never been questioned by the IRS since 1987

 

[Geo-TH,In]

So what does having a CPA fill out one's tax return having any bearing on jhwis's original question?? For what its worth I also have a CPA fill out my income tax return.

I think main difference is what % of one's income or loss is generated from being in agriculture. My income/loss is 100% agriculture related & I've never been questioned by the IRS since 1987

And I don't pretend to be smarter than a CPA to hand out advice on taxes.
I've use a CPA for the past 50 years.
My taxes are a half inch thick.
I can tell you I can only write off $3000 losses a year.
I'll still recommend a CPA for the best advice or you can call the IRS.
If the IRS finds a mistake, you will pay plenty, interest and back taxes.
Not to mention the IRS audits usually goes back 3 years. If they find anything outrageous
there is no limit to how many years they can go back and audit your taxes.
My advice is worth every penny I'm getting paid.

That's all I have to say about that.

 

[will-max dairy]

What is your experience on claiming a loss on schedule F? How many years in a row have you and have you ever been audited,etc?

Three questions.

Three answers.

19 years
19 years
never

But, I also have boxes and totes with receipts from all of those 19... check that... as of last year, I finally started throwing away boxes that were more than 10 years old...

 

[m16ty]

Three questions.

Three answers.

19 years
19 years
never

But, I also have boxes and totes with receipts from all of those 19... check that... as of last year, I finally started throwing away boxes that were more than 10 years old...

My CPA tells me to never keep anything over 7 years old. That is the max limit the IRS requires and if you don't have it they can't check it. If you do have records beyond 7 years they can look at it, but if you don't have it there is zero they can do.

 

[Texasmark]

My CPA tells me to never keep anything over 7 years old. That is the max limit the IRS requires and if you don't have it they can't check it. If you do have records beyond 7 years they can look at it, but if you don't have it there is zero they can do.

I don't have a problem with IRS looking at any of my records.........

 

[m16ty]

I don't have a problem with IRS looking at any of my records.........

I’m glad you are that confident, but something as simple as a clerical mistake 10 years ago could cost you the assessment of the mistake, plus 10 years penalty and interest.

My experience has been that the less you have the government looking at any of your business the better off you are.

 

[jhwis]

I’m glad you are that confident, but something as simple as a clerical mistake 10 years ago could cost you the assessment of the mistake, plus 10 years penalty and interest.

My experience has been that the less you have the government looking at any of your business the better off you are.

Agreed

 

[E.B. Haymakin']

What is your experience on claiming a loss on schedule F? How many years in a row have you and have you ever been audited,etc?

I can't see them auditing any agricultural operation on anything other than a whim.....fundamentally cannot see any farm making any money if they are not receiving USDA farm subsidies....are those dollars taxable as income? If it were not for PPP money tax right offs and non reporting businesses would be going bankrupt in huge volumes....