Beekeeping is no differient than any other business that you may invest money in.
If he went into beekeeping to make a profit, and now intends to quit then yes he can deduct everything that he spent.
If he intends to stay in the business then he might want to set up his investment on depreciation. Yearly depreciation may be taken as an expense up to a set amount that changes almost yearly.
Still if he is staying in the business he can deduct the expense of replacing the bees that he lost.
The only catch is that he must show a profit every 3-5 years, I'm not sure about the time frame this current tax year.
The other good thing is if he reinvests every year the profits from the past year he never has to hypothetically pay taxes on a profit.
Don't believe any thing else, and if your tax accountant tells you any differient go to one that knows how to file farm/business forms.
If he's in it just for fun then he needs to forget it. But with 20+ hives it surely is a business.
Respectfully, I disagree. Point being, If he makes $1000.00 profit off of those 20 hives and he gets audited, the IRS will check his bank account and he WILL pay taxes on those PROFITS. It does happen. One of the first things the IRS looks for is deposits out of the ordinary.
>>>The only catch is that he must show a profit every 3-5 years, I'm not sure about the time frame this current tax year.
The only catch is that you have to show that you are actively TRYING TO MAKE PROFIT. Amazon.com lost money for 10 years, nooone questions that they are business. That "profit year" test is a common misconception. Most of the farms that have a little extra money can afford to buy more equipment, so they will be showing loss or breakeven on many occasions.
At what point would it become a bus? 20 hives with associated equipment would easily add up to several thousand dollars. Everyone has to start with something. It would be hard for a new beek to buy a couple hundred hives to start with. You have to see if you can even keep bees alive before you grow.
I just found out i cant write off beekeeping expenditures from last year as well!!! I didnt sell a dimes worth of honey last year and i wont this year either!!!!!!
I would strongly suggest you find another tax preparer. Sounds like something H&R Block and other national preparers will tell you. They will take the easy and sure way. Find an independent preparer that does farm and business.
It's been a while since I studied up on tax stuff, but what makes something a business is often "intent." I decide to go into a beekeeping business (try to earn $$ from my efforts), so I jump thru the hoops, get my license from the city, register my name, etc. Whether I make a profit is often irrelevant, but of course the IRS will stare closely at you if you file year after year showing loss after loss. A truck farmer from Slarita Farms selling potatoes off his truck or at the local farmers market, is indeed in a business, according to the IRS, even though it may seem like "small potatoes" to Green Giant. And many hobbies do transition into businesses. You can't keep a hobby a hobby forever, if it makes a certain amount of money regularly. Can't remember the rules, but it's pretty clear if you just visit IRS.gov.
If he paid to purchase the bees, he should have deducted the purchase price. He can't take another deduction for the same bees.
Also, the definition of a casualty loss is something that is sudden, unexpected, or unusual. I'm not sure this would qualify.
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