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  1. #1
    Join Date
    Aug 2009
    Location
    Livingston County, NY
    Posts
    527

    Default going from hobby to schedule C??

    How would you go about itemizing & putting a value on honey producing assets (hives, extracting, carpentry eq. etc.)?? Do I have to hire an appraiser or just an itemization index of sorts?

    I have been building & buying quite a bit of equipment for the last 5 years & I would like to offset my taxable income. Any thoughts, advice, warnings?

    Would this be a "schedule F" farming?
    Rmns 1:16/Prv.3:5,6/ Beegan BK May 09/ Zone 5b
    I have NOT failed. I have only found many many ways that do not work!

  2. #2
    Join Date
    Aug 2002
    Location
    Nehawka, Nebraska USA
    Posts
    46,142

    Default Re: going from hobby to schedule C??

    I've always done a schedule F. I think it's your choice, but you may come out ahead on a schedule F as the IRS is a bit more forgiving for the ups and downs of farming, which beekeeping really is.
    Michael Bush bushfarms.com/bees.htm "Everything works if you let it." ThePracticalBeekeeper.com 40y 200h 37yTF

  3. #3
    Join Date
    May 2013
    Location
    Chardon, Ohio
    Posts
    86

    Default Re: going from hobby to schedule C??

    Establishing a value for hardware is easy. If you have not depreciated your hardware on prior tax forms you simply add up receipts for purchases that document money you spent and establish a life expectancy for each purchase. Establishing a life can be tricky as some things get accelerated depreciation depending on which tax form you use to file. Sweat equity such as carpentry has zero value on tax forms. If you hired labor to build frames or boxes what you paid that labor is deductable as a current expense, but the cost of materials is capitalized. If you rent equipment, truck, land, etc that rental fee is a current expense. If you do not have receipts to document purchases you can not deduct those costs.

    If your business is of any significant size you need to think seriously about hiring an accountant as figuring out taxes can be tricky. You also can not operate at a loss year after year or the government will declare your bees a hobby and not allow deductions greater than income.

  4. #4
    Join Date
    Feb 2012
    Location
    West Bath, Maine, United States
    Posts
    1,138

    Default Re: going from hobby to schedule C??

    Richard is correct. An appraiser can tell you your hive is worth $100. What you need to know is what is your basis, what you have into it without your labor. If it is just the wood, electricity, cost of saw used exclusively for bee work, that is your basis. If you bought it that is simple. You can value everything as individual pieces or group them as an entire group; all starting eqipment or yearly breakdowns .

    The idea is reasonable. Does your accounting reflect your actual activity. If you go cash basis you can group exspenses and sales to meet the profit requirements. Hold your sales over to the next year and make a profit year and a loss year.

    If you do not have a receipt, it is a low audit risk to declare a reasonable true basis for equipment converted from hobby to business use. A professional is putting his license on the line every time they sign their name to your records.

    Fair and reasonable accounting within the rules, even if it favors you will not get you in trouble. Stretching things too far will get you a snap back, and it should.
    4 yrs, Peak 14, back to zip, T lite; godfather to brother's 3.

  5. #5
    Join Date
    Aug 2009
    Location
    Livingston County, NY
    Posts
    527

    Default Re: going from hobby to schedule C??

    I do work a small farm & I have not attempted to use assets for tax burden reduction.

    A large portion of my bee stuff is made or bought w/out receipts. I have a significant amount invested, not well recorded.

    Michael do you combine bees w/your other farming assets?

    Anyone else combine for schedule f?

    I very much appreciate that you would reply to this post. Thank you very much!
    Rmns 1:16/Prv.3:5,6/ Beegan BK May 09/ Zone 5b
    I have NOT failed. I have only found many many ways that do not work!

  6. #6
    Join Date
    Apr 2011
    Location
    lee county, fl, usa
    Posts
    858

    Default Re: going from hobby to schedule C??

    I am addressing only the schedule C vs F issue. Last year I wanted to start filing with schedule F. My accountant put it on a schedule C. When I went in to pick up my completed taxes, I said I asked for C, not F. Receptionist called accountant, he said it didn't make a difference but would put on F if I wanted. Yes, that's what I wanted. Went back 2 days later to get my completed taxes, they were still on C and again he said it didn't matter. I filed on C form, not happy.

    Afterward someone on beesource, and accountant I believe, said that in IRS eyes C is the wrong form. I didn't amend last year--but this year I'm going to find a new accountant and file on F form.
    Pleasant words are a honeycomb, sweet to the soul and healing to the bones. Prvb 16:24
    March 2010; +/- 30 hives, TF

  7. #7
    Join Date
    Feb 2012
    Location
    West Bath, Maine, United States
    Posts
    1,138

    Default Re: going from hobby to schedule C??

    It is important for anyone to have an understanding of taxes. Some people enjoy them. Most do not. I would read the IRS publications on the basis of assets, and converting to business use. Many people would find whittling frames out of logs as a more enjoyable and profitable use of time.
    I have not filed a F, my recollection is there are some loss provisions that are more favorable, but the structure and whom if anybody you have do your accounting are more important. The C or F should follow your plan not lead it.
    4 yrs, Peak 14, back to zip, T lite; godfather to brother's 3.

  8. #8
    Join Date
    Aug 2002
    Location
    Nehawka, Nebraska USA
    Posts
    46,142

    Default Re: going from hobby to schedule C??

    >Michael do you combine bees w/your other farming assets?

    I file two schedule Fs, one for horses and one for bees.
    Michael Bush bushfarms.com/bees.htm "Everything works if you let it." ThePracticalBeekeeper.com 40y 200h 37yTF

  9. #9
    Join Date
    Jul 2013
    Location
    Pleasant Shade, TN
    Posts
    444

    Default Re: going from hobby to schedule C??

    This would be a good topic for the Resources section of BeeSource.
    A man is worth just as much as the things about which he busies himself- Marcus Aurelius

  10. #10
    Join Date
    Apr 2005
    Location
    Salem, Oregon
    Posts
    952

    Default Re: going from hobby to schedule C??

    Start talking around your area with succsessful business people and locate a GOOD CPA.
    Find one that not only is good at his or her job, but one that you can talk to, is friendly and you are comfortable with.
    Then purchace Quickbooks.
    Pay the CPA to set down with you and set up your company on Quickbooks on your computer.
    SET ASIDE TIME REGULARLY TO LEARN QUICKBOOKS!!!
    If you will do these things and do them right your book keeping will be a breeze.
    From there, your CPA will advise you when you have questions about investments on equipment and tax implications of your expenditures.
    If you are ever audited, your CPA will handle all of that so YOU BETTER DO THINGS RIGHT so that you are defendable.
    When ever you make a purchace, insist on a recipt. Staple each recipt to a piece of paper and the returned cancelled check.
    File these in order in a yearly file.
    When you send out an invoice and recieve payment, photocopy the check, staple it to a copy of the invoice along with your deposit slip.
    Keep all of your monthly bank statements filed in order.
    What you want to set up is accounting so iron clad that the IRS has absolutly not one single teency-weency thing to ***** about.
    And its easy to do if you get started out right.
    Don't be a slob! Set up an office and keep things in order.
    You have enought to worry about in beekeeping. Keep the rest simple and neat!
    My $.02
    I have exactly ONE hive more than you.
    That makes my opinion beyond question.

  11. #11
    Join Date
    Jun 2010
    Location
    Fresno Ca USA
    Posts
    145

    Default Re: going from hobby to schedule C??

    It's a schedule F farm schedule.
    California Almond Pollination Services, Inc.
    http://www.almondbeepollination.com

  12. #12
    Join Date
    Feb 2012
    Location
    West Bath, Maine, United States
    Posts
    1,138

    Default Re: going from hobby to schedule C??

    That is a good $.02 worth.
    4 yrs, Peak 14, back to zip, T lite; godfather to brother's 3.

  13. #13
    Join Date
    Aug 2009
    Location
    Livingston County, NY
    Posts
    527

    Default Re: going from hobby to schedule C??

    I have Quickbooks for my remodeling bizz. My accountant is not Schedule F savvy. I hate to change because she's been my accountant for a while. BUT I do run a small farm & it is necessary.

    Can anyone recommend an easy to understand publication on starting/running a farm as a business.
    Rmns 1:16/Prv.3:5,6/ Beegan BK May 09/ Zone 5b
    I have NOT failed. I have only found many many ways that do not work!

  14. #14
    Join Date
    May 2012
    Location
    Canandaigua, NY
    Posts
    13

    Default Re: going from hobby to schedule C??

    I treat my bee business like a normal schedule C business, but file it as a schedule F. In Quickbooks, I have accounts that are not on a schedule F, such as advertising, or office supplies. I assign them to schedule C account names. When I go to file, I move those $ amounts to an appropriate account on a Schedule F. When I buy something that is not on paper, i.e. craigslist, I print the ad out if I can. If not I make a hand receipt with date, seller info if I can, item, cost...exc. Now you have a paper trail for what you buy on the DL.

    I have purchased all my hives, so I right them off as a 179 equipment expense and take the full value in year 1 if I have profit to cover it, but I switched to call them supplies and file them that way, less paperwork and figuring than doing it as a 179. Larger items, trucks, trailers and alike I will span over years. If you make your hives, you cant mark them down for what you would have paid for them, as your labor does not count.

    I also lump my maple business and bees together on the same Schedule F. Same business name, same Quickbooks file and same bank account. Setup accounts in QB to track the different businesses. I can have accounts in QB showing bee supplies and another for maple supplies, both get lumped together on the schedule, as supplies. But this way I can track my income and expenses and see what is profitable or not. You can make them as elaborate as you want or as simple as you want.

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