The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
Many of our readers will ask us questions about starting a farm, however, when discussing it with them, many of them are talking about a hobby farm and not a real farm. For tax purposes, a hobby farm has some very unfavorable consequences to the farmer. Net income is always reported, however, a net loss is limited in zero.
Therefore, how do you make sure that your farm is a farm and not a hobby. Here are several items to keep in mind:
Remember, the key point to ask yourself, is this truly a operation operated like a farm business, or is it merely intended to create a tax loss. If it is the latter, then it is more difficult to not treat as a hobby.
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