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Tax Deduction Consulting: Farm Deductions Morgantown WV

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.

Edwin Landis
60 West Street Suite 404
Annapolis, MD
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Title: Financial Consultant
Company: Landis Financial Services
Type
Investment Advisor Rep: Yes
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Michigan State University/ BA
Service
401k Rollover From Employer,Income for Life/ Preserve Principal,Life Insurance,Investment & Portfolio Management,Investment Consulting & Allocation Design,Business Succession & Liquidation Planning,Estate Tax Planning,Asset Protection Strategies & Planning,Hourly Financial Planning Engagements,Stock Market Alternative,Medicaid,Retirement Planning,Long-Term Health Care Planning,Annuity Ideas & Strategy Planning,Planning For Personal Finances & Budgeting,Retirement Income Accumulation Planning,Ind

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Liberty Tax Service
(866) 871-1040
827 Fairmont Rd
Morgantown, WV

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H&R Block
(304) 366-3728
32 TYGART VALLEY MALL
WHITE HALL, WV

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H&R Block
(724) 966-9227
211 S VINE ST
CARMICHAELS, PA

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Liberty Tax Service
(866) 871-1040
103 N Pike St
Grafton, WV

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Tax Tech
(304) 296-1040
990 Fairmont Rd Ste C
Morgantown, WV

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Liberty Tax Service
(866) 871-1040
735 Chestnut Ridge Rd
Morgantown, WV

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Liberty Tax Service
(866) 871-1040
911 Country Club Rd
Fairmont, WV

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Jackson Hewitt
(724) 438-1319
38 North Gallatin Avenue
Uniontown, PA

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H&R Block
(304) 265-2662
12 BLUE Ave
GRAFTON, WV

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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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