Exciting question - taxes!

reddogie(5)February 17, 2011

For the past two years we've filed our cutflower business as a home business. However, I'm realizing we really do fall into the farming category (we currently grow about 1/3 acre of flowers on 1/2 acre, but are planning on adding another 1/2 acre in the next year into production). We sell at farmer's markets, subscriptions for residents and b&b's, and wholesale to small grocery markets.

I guess what I consider a farm is something with a fair amount of acreage - however when I look at the definitions of a farm business we definitely fit better as a farm than with a home business even though we are in a zoned rural residential area (we have about three acres).

My question is for those of you who have small operations that may or may not be zoned commercial. Do you file as a small business or a farm? Tax advice seems to say as long as you are growing a crop for profit you're a farm. I'd like some "real life" scenarios though if any of you have them. I didn't get a very clear answer from our co-op extension.

What fun to include IRS publications with all of our other seed and planting and marketing and....so on and so on readings! Getting a headache from reading too many tax booklets!

Thanks in advance,


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thinman(Z5 MI)

I can't say that I am an example of how to do things right, but I report my flower sales as farm income on Schedule F. There is a category called 111400 Greenhouse, nursery, and floriculture production that seems to cover what I do, and it's useful to have the different slots on the Schedule for claiming the expenses that we all incur in growing our stuff. I haven't seen anything that indicates that the number of acres has a bearing on the use of the form, which is good because I'm a very small grower and seller.

If you haven't already done it take a look at Schedule F and see how it would work for you.


    Bookmark   February 17, 2011 at 4:53PM
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Thanks for the response

Looking at Schedule F it is certainly clearer for the type of expenses we generate - office supplies and inventory just don't illustrate our operation! Most of our "inventory" disappears (hopefully) on a weekly basis during the growing season.

Gee...I've always wanted to live on a farm...who knew I already did!

Thanks again...

    Bookmark   February 18, 2011 at 10:32AM
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I started my farm business at my home 5 years ago. I went to my local accountant and explained that I wanted to turn my property into a farm for cut flowers and I filed as a a sole properitor. You need to find out first if your property is zoned for farm, mine happended to be light farming. I can include my home office, green houses and all the property that is designated for farm when I do my taxes. I keep track of my mileage, all my invoices, sales etc. and give it to my accountant and they figure it all out we save $$$$$.$$ on our taxes since my husband has a full-time job other than the farm. Farming at your home is a good write-off. She amortized my vehicle I use for deliveries, computer, equipment etc. I'm not an accountant and for the nominal fee she charges it is well worth the savings.

    Bookmark   March 10, 2011 at 2:07PM
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