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Tax Deduction Consulting: Farm Deductions Brattleboro VT

The regulations are fairly simply for someone using the cash accounting method. When the accrual method of accounting is used, it is important to note that the deductions can not be taken until the money is actually spent, or the services received, or the liability is actually realized.

Liberty Tax Service
(866) 871-1040
972 Putney Rd # 6
Brattleboro, VT

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H&R Block
(802) 388-3190
260 Court ST
Middlebury, VT
 
Danaher Attig & Plante PLC
(802) 383-0399
150 Kennedy Drive
South Burlington, VT
 
Liberty Tax Service
(802) 865-2829
1197 Williston Rd
South Burlington, VT
 
H&R Block
(802) 288-8079
4 Carmichael St
Essex Junction, VT

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H&R Block Inside St Albans Commons
(802) 524-3140
178 SWANTON RD
SAINT ALBANS, VT

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Kupiec Al & Associates
(802) 879-1509
58 Pearl St
Essex Junction, VT
 
Independent Tax Service Inc
(802) 863-2271
Chace Ml
Burlington, VT
 
Jacob Philip H Tax And Business Services
(802) 862-8889
12 Perrotta Pl
Burlington, VT
 
Misasi & Misasi PC
(802) 388-6307
11 Ct St
Middlebury, VT

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Tax Deduction Consulting: Farm Deductions

Farm Deduction

The farm deduction is given to farmers who have certain expenses that are incurred in the ordinary and necessary operation of a farm. The deduction is treated much like a business deduction with some exceptions.

The information needed to calculate and claim the farm deduction is found in the Internal Revenue Code Section 62 and Treasury Regulation 1.162-12. It allows a tax deduction for expenses that are incurred in the ordinary and necessary operation of a farm. This includes maintenance of the farm, its buildings and equipment. As always, the exact definition of ordinary and necessary is sometimes hard to pin down with certainty. Usually, the majority of such expenses are certainly ordinary and necessary, but there is always going to be one or two items that appear to be on the bubble.

The regulations are fairly simply for someone using the cash accounting method. When the accrual method of accounting is used, it is important to note that the deductions can not be taken until the money is actually spent, or the services received, or the liability is actually realized. Many farmers use the accrual method which takes in account projected income and expected expenses because of the cyclic nature of the farming operation. The IRS does not recognize a deposit for seed, for example, that is not going to be received until the following planting season, as an expense in the current year.

Internal Revenue Code 464 limits pre-paid supplies if they exceed 50% of the total farm expense deduction. If the pre-paid supplies are actually used during the tax year, they are fully deductible. The intent of IRC 64 is to prevent tax payers from using farms to shelter income that is not related to the farm.

The farm deduction can be taken on certain expenses, however, that are pre-paid when they constitute an actual commitment that is binding and unchanging. There are rules set out that explain the difference between the deposit and the pre-paid expense tha...

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