SHEEP FARMING: The search for a niche.

greybeard

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TOR, thank you for your very informative post. As to the part of what you eat, here in the US, the IRS code states that you can only deduct the cost of your meals only when you travel for your farm business, however the price of the meal must be reduced by 50%. This applies ONLY if your farming is for PROFIT and you must file a farm Schedual F. If your farming endeavors are a HOBBY, well then these types of deduction DO NOT APPLY !
No, they don't but even hobbyist are best served if they follow much of the advice ORA has posted.
Want or need something but think it's not in your budget?
How will you know if you haven't paid close attention to what you have going out $$ wise?
Not a 'for profit' farmer today? Don't mean you won't be one or try to be one next year and the last thing you want to do is try to learn how to keep track and get the best bang for your $ in the middle of your first attempt.
You'll never know if your hobby is costing more than it should if you don't keep track of costs.
 

Baymule

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I keep up with costs. Having several businesses over the years taught me well. IRS? Don't even get me started......:barnieWe closed a furniture store the end of 2011, in May of 2012, I received two checks from the IRS totaling over $23,000! :thThe idiots refunded 6 months of with holding taxes and I had a hard time giving it back. @greybeard you will remember Marvin Zindler on channel 13 in Houston. I contacted him and he was delighted to have me on his news segment and make the IRS look like buffoons. He contacted the feds at the Smith building downtown Houston and sent me there. I took all my paper work proving that I did have employees for that 6 months and gave the checks back.
 

greybeard

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Mar...vin Zindler....EYEwitness News...His weekly restaurant inspection segment was a hoot. "We found roaches in the coleslaw and mold in the ice machine..."

Mr Toupee himself...but he really did care about people.
 

The Old Ram-Australia

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G'day,what I meant by recording what you eat was if you eat a lamb you bred, you should credit it as a sale T.O.R.
 

Bossroo

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When recording the value of the lamb that you eat, what value do you place on it? Do you give your tax preparor to use the price you get at the local stock auction house ( example: $0.89 / lb ), or the price of lamb at the grocery store ( example: $ 8.99 / lb) , or ? That could make a weeeeee bit of difference to the bottom line .
 
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norseofcourse

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At the tax class at the farm conference last year, for animals you consume yourself, you could figure it two ways. One would be to not count the expenses of raising any animals you consume yourself (could be difficult to figure, depending on how detailed you get in your expenses). The other was to count as income the amount that animal/product would have earned you, based on market price or what you've sold others for.

So for last year, the lamb I put in my own freezer I counted as income based on its hanging weight, times what I got for the other lambs. Yes, I do Schedule F.

(In response to Bossroo's other comment that was later edited out: ) I would love to get an official answer on how someone doing this for a hobby should figure it. My gut feeling is that if you're doing it as a hobby, not deducting expenses, any animal or product you consume would not be counted as income. If it were, that could mean anyone who has a couple chickens for personal use would have to start putting a value on those eggs they eat, and adding them to their income. And anyone that puts in a garden would have to start adding up the value of all those beans, tomatoes, zucchini and corn and adding them to their income...
 
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Bossroo

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At the tax class at the farm conference last year, for animals you consume yourself, you could figure it two ways. One would be to not count the expenses of raising any animals you consume yourself (could be difficult to figure, depending on how detailed you get in your expenses). The other was to count as income the amount that animal/product would have earned you, based on market price or what you've sold others for.

So for last year, the lamb I put in my own freezer I counted as income based on its hanging weight, times what I got for the other lambs. Yes, I do Schedule F.

I would love to get an official answer on how someone doing this for a hobby should figure it. My gut feeling is that if you're doing it as a hobby, not deducting expenses, any animal or product you consume would not be counted as income. If it were, that could mean anyone who has a couple chickens for personal use would have to start putting a value on those eggs they eat, and adding them to their income. And anyone that puts in a garden would have to start adding up the value of all those beans, tomatoes, zucchini and corn and adding them to their income...
You braught up an interesting point that I was also pondering. Since TOR's Australian tax code is quite different in some respects ( ? ) to the US one , I called the IRS to ask. A IRS Auditor just returned my call. So , here it is the current official word ! The code states that an animal or produce that you raise and then consume yourself and family only, you just remove it from your inventory and you DO NOT DEDUCT ANY EXPENSES FOR IT'S PRODUCTION OR ADD IT'S VALUE TO YOUR INCOME. Same goes for a hobby farm. So Norse, sorry but you overpaid on your farm income taxes. That is if the price difference put you into a higher tax bracket.
 
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greybeard

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You braught up an interesting point that I was also pondering. Since TOR's Australian tax code is quite different in some respects ( ? ) to the US one , I called the IRS to ask. A IRS Auditor just returned my call. So , here it is the current official word ! The code states that an animal or produce that you raise and then consume yourself and family only, you just remove it from your inventory and you DO NOT DEDUCT ANY EXPENSES FOR IT'S PRODUCTION OR ADD IT'S VALUE TO YOUR INCOME. Same goes for a hobby farm. So Norse, sorry but you overpaid on your farm income taxes. That is if the price difference put you into a higher tax bracket.
IOW, for tax purposes, it's as if that animal never existed.
 

The Old Ram-Australia

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G'day, my original thoughts were directed at mainly the "hobby" portion of the group,so they could get a "feel" for how their project is performing ie. where do you stand $ wise and to help you should you in the future decide "farming" is the life for you.If you are already running a "commercial operation",you would naturally be following the tax laws that apply in your country. But I think the whole exercise has been worthwhile because of the discussion it generated...T.O.R...
 

Baymule

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I agree, this is a good discussion. Even if someone has their animals for their own enjoyment and consumption, it is good to keep up with expenses.
 
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