Ag-Visors

Enforcement action by the Internal Revenue Service has increased in recent months in the farming, horse and livestock fields, partly due to the need for the government to raise revenue, and partly due to an increase in taxpayers failing to file tax returns or failure to pay taxes owed. One of the principal problems with getting audited is that the IRS considers losses to be a red flag for the idea that you are operating a hobby rather than a business in the farming, horse and livestock industries, particularly if you have a principal occupation other than farming.



Everyone is getting ready for breeding season at this time. Are your bulls ready to go? Bulls are very important to the herd. A good bull can change your calf crop very quickly and make or break you. The wrong bull can produce too big of calves, too small of calves (dinks) or not get any of your cows pregnant.

Enforcement action by the Internal Revenue Service has increased in recent months in the farming, horse and livestock fields, partly due to the need for the government to raise revenue, and partly due to an increase in taxpayers failing to file tax returns or failure to pay taxes owed. One of the principal problems with getting audited is that the IRS considers losses to be a red flag for the idea that you are operating a hobby rather than a business in the farming, horse and livestock industries, particularly if you have a principal occupation other than farming.



It is a nice summer evening in late June. You and your wife are sitting on your front veranda looking at a herd of cattle you own. A herd whose lineage you can proudly trace back to your great-grandfather. The next morning, you walk back onto your front veranda, coffee-in-hand and you stare in belief: Where is the herd I own? All of the cattle that were there last night are still there but you no longer own them. You have not sold your herd nor has your bank claimed them. No, but overnight, a new state law went into effect declaring that from now on you do not own your animals but, rather, you are their guardian. A new law that abrogates the long recognized law that domestic animals are property that can by owned be individuals and entities.

It is a nice summer evening in late August. You and your wife are sitting on your front veranda looking at a herd of the cattle you own. A herd whose lineage you can proudly trace back to your great-grandfather. The next morning, you walk back onto your front veranda, coffee-in-hand and you stare in belief:  Where is the herd I own? All of cattle that were there last night are still there but you no longer own them. You have not sold your herd nor has your bank claimed them. No, but overnight, a new state law went into effect declaring that from now on you do not own your animals but, rather, you are their guardian. A new law that abrogates the long recognized law that domestic animals are property that can be owned by individuals and entities.

Many people who own livestock farms are full-time professionals in non-farming fields. But another large segment of ranching consists of retired individuals who wish to supplement their retirement income with profits from ranching, farming or raising horses.  The IRS often enough will assess deficiencies against these individuals based on the idea that the activity is simply a means of generating tax write-offs. An example of this was the case of Garbini v. Commissioner, T.C. Summary Opinion 2004-7. This involved  the issue of whether the taxpayers were engaged in an activity for profit in connection with a cattle and horse breeding operation in Myrtle Creek, Ore.

Nineteen years ago I moved to this area and started practicing veterinary medicine. I was amazed at the blinding green and the growth of the grass. I was told by other veterinarians that if I did not know what was making the cattle sick, just blame it on fescue. Well, that sounded like a cheap out, and a disservice to my clients, so I started doing some research.

It’s tough getting started in any career field these days, but farming and ranching presents a special set of challenges. For many just getting started, land is the largest and most expensive investment. Leasing land to get an operation started, or to expand one, is a good option, but before you agree to any obligations be sure you know what you are really agreeing to. These are a few considerations to think about before entering into any agreements to lease land.

It’s tough getting started in any career field these days, but farming and ranching presents a special set of challenges. For many just getting started, land is the largest and most expensive investment. Leasing land to get an operation started, or to expand one, is a good option, but before you agree to any obligations be sure you know what you are really agreeing to. These are a few considerations to think about before entering into any agreements to lease land.

With spring and summer just around the corner, people are starting to feel the dollar pinch from the many expenses spring brings at the farm — horse shoeing, colostrum and milk replacer, supplements, fertilizers and more. The additional costs to running a production agriculture business don’t stop there. Looking ahead, it is time to start making your travel plans for upcoming rodeos, summer county fairs, horse shows, FFA farm sales and auctions.