Please Help with Tax strategies

[Mill Iron A]

Hello,

I grew up on a ranch and went to school for Animal Science. Since graduating I have worked nutrition and A.I. jobs on the side to get to the point where I can start my own cow herd (family ranch still there but big catastrophe brewing on being able to make a business there, not because of opportunity but because of family) So long intro to my question, what do the more seasoned business guys out there do for breeding stock depreciation, expenses, and just an overall tax strategy. We filed our first schedule F last year but it wasn't as big of a deal. This year with buying 10 cows and having partner cows, flush mate embryo calves retained and sold, I'm starting to think I need to put a much more serious plan and strategy to pay the least taxes but still show that this is supposed to be a for profit enterprise. Any feedback would be greatly appreciated.

Thanks,

Tyler

 

[mrj]

Congratulations on going to school, and in getting started on your business ideal.

Would asking ranchers and others you respect who would be the best tax preparer you can afford and at least make an appointment to get their ideas on how you should proceed make sense for you at this point?

mrj

 

[LCP]

The money spent on getting a good accountant is worth it. It costs me about $300 for him to do my taxes, and about another $100 to do an estimate toward the end of the year. Don't try to figure it out yourself, for the same reason you hire a lawyer to do your legal work. And then when the IRS sends you a letter, you've got someone who can take care of whatever issue they have with your filing. That happened to me last year. IRS sent me a letter saying I owed them $6000+. I called my accountant and he said no, I don't owe it, the IRS made a mistake. They sent me letters once a month for 6 months saying they were "working on it" but I could pay them now and avoid interest and penalties. I didn't pay, on my accountant's advice, and they finally sent me a letter saying I didn't owe anything. God only knows how long it would have taken them to refund my money if I had paid. To summarize, I was very happy to have someone to turn to for help in that situation - not to mention someone who understands tax law (which is constantly changing and ridiculously complex) to help me make good decisions on depreciating equipment and managing income and expenses.

I don't think the IRS cares all that much about showing profit, at least not for a while. Pretty sure I didn't show any for about the first 5 years ranching full-time on my taxes, as we were building cow numbers as fast as we could and putting as much back into the business as possible.

 

[Haytrucker]

mrj is exactly right. 25 years ago we asked around and found our tax lady. Best thing to ever happen to us in the staying solvent department. My nephew works with a good one in Wyoming. PM if you want, I can get contact info. As for specific strategies, they change from year to year, and the proper professional help will be worth way more than it costs.

 

[Mill Iron A]

Thanks a bunch for the replies, I was going to head that way eventually but was thinking we were a little small to do that yet. Looking at it now we might as well start right to end right. Thanks again.

 

[Brad S]

Mucho depreciation increase.

 

[PPRM]

Find one that specializes in Ranching/Farming. It took me awhile to find that one. Most don't seem to understand the nuances of Cash accounting and have you spend a ton of time on accrual exercises.