farmer???

[Hahn1040]

I have never done a farm before. This year I have two clients who are "farming". the one owns land: 6+ acres. They pay someone to cut the hay. He keeps the hay for his own use. They pay $100 they hay is worth $300. Can this go on a schedule F? Can I use the interest and taxes on the land prorated for the percentage of hay land to total land? There is no building on the land- so does not qualify for second home.

The other one owns land 65+ acres. He allows a farmer to graze his cattle. No money changes hands. The farmer does some work in return: repair fence/ cut hay. My understanding is that this goes on Sched E. Is it subject to the same passive activity rules as a rental house? His income is over $150,000- so no deduction for his two rentals.

[zeke]

From data provided, Both "farmers" are in fact "hobby farmers". Neither has any indicated profit motive or realistic expectation of a profit.

z

[bstaxes]

Questions Farmer 1- He might be doing it for farm assessment taxes, then the farm land would have a separate tax bill (ask). What does he do with the hay? sell it, use it for his animals? $300 is not much hay, it is about 75-100 bales. If he is feeding his own animals (that are for profit not just pets) he might have a sch f.

Farmer 2 If he were paid for his work (repair and cutting hay) he could use that to pay the rent for the pasture.

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