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Tax Deduction Consulting: Farm Deductions Juneau AK

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.

Hutton & Hauber Tax & Accounting Services Inc
(907) 789-3091
9340 Glacier Hwy
Juneau, AK
 
H&R Block
(907) 789-9898
3017 CLINTON drSTE 100
JUNEAU, AK

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Mr. Micah Vincent Shilanski (RFC®), CFP, CSA
(907) 278-1351
431 W. 7th Avenue Suite 100
Anchorage, AK
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Shilanski & Associates, Inc.
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Years of Experience: 9
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IARFC
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Invoice, Estate Planning, Business Planning, Portfolio Management, Pension Planning, Retirement Planning, Tax Planning, Tax Returns, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, Mortgage Loans, CommOptions, Collectable Coins , Precious Metals, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Education Plan, Healthcare Accounts, BuySell

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H&R Block Inside Eastview Center
(907) 337-1040
5520 LAKE OTIS PKWY STE 102
ANCHORAGE, AK

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H&R Block
(907) 283-4889
11312 KENAI SPUR HWY
KENAI, AK

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Hauber & James Tax & Financial Services Inc
(907) 789-3091
9340 Glacier Hwy Ste 43b
Juneau, AK
 
Logan General Tax Practice
(907) 789-3894
2245 Jordan Ave
Juneau, AK
 
Liberty Tax Service
(866) 871-1040
2207 E Tudor Rd # 35
Anchorage, AK

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H&R Block
(907) 336-1477
9220 LAKE OTIS pkwy UNIT A-1
ANCHORAGE, AK

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H&R Block
(907) 338-4848
7731 E NORTHERN LIGHTS BLVD
ANCHORAGE, AK

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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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