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Rural Tax Education

2016

Farm

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Farm Losses Versus Hobby Losses: Farmers Must Plan Ahead To Avoid Adverse Tax Consequences, Jc Hobbs Sep 2016

Farm Losses Versus Hobby Losses: Farmers Must Plan Ahead To Avoid Adverse Tax Consequences, Jc Hobbs

Rural Tax Education

The hobby loss rules which determine whether a venture is a business or a hobby, is a frequently misunderstood area of tax law that causes producers who are experiencing difficult economic times to worry, perhaps unnecessarily, that the venture will be viewed as a hobby rather than a true business venture. This article is intended to provide information to help producers reduce the likelihood that the business venture will be deemed a hobby.


How Do The At-Risk Rules Apply To A Farm Business?, Jc Hobbs Jul 2016

How Do The At-Risk Rules Apply To A Farm Business?, Jc Hobbs

Rural Tax Education

The majority of farm businesses will not be subject to the at-risk rules. However, when a business is subject to these rules, the deduction of losses will be limited to the amount that the producer has at risk. The amount at risk is the amount the taxpayer could actually lose from the activity. If the at-risk limitation rules do not apply, other rules such as the passive loss rules or the hobby loss rules could still limit loss deductions. The purpose of this article is to explain the at-risk limitations as they apply to both farm and non-farm business activities ...