Closing a farm LLC

[FarmerBillRet]

My wife and I self funded and developed our farm from the ground up 14 years ago. We were on our way to making a go of it before the glut of pork as a result of the tariff wars overwhelmed the market immediately followed up by covid that ruined our marketing and distribution model. We are both in our late 60s and enough is enough. Here's my question.

We invested far more in the farm than we have received in return. We have no outstanding debts to anyone and are square with our state in terms of business taxes. How do I use TurboTax to show the farm assets coming to us in partial compensation for the money we've invested? I want this to be clean, tidy, and done by the book. After all we've dealt with the idea of being dragged through anything with the IRS has no appeal whatsoever.

[DaveF1006]

Yes you can declare a complete disposition of the farm in turbo tax.

1. Log into Turbo Tax
2. Go to federal>income and expenses
3. Go to Rentals, Royalties, and Farm>Farm Income and Farm Rental
4. When you get to the screen that asks if you received, farm income, you will say yes, Answering this question yes will enable you to report that you disposed of the farm.
5. When you reach a screen that says Tell Us About Your Farm, check the box that says I sold or otherwise disposed of this farm during 2021.
6. Mark the question yes if it asks you if you materially participated.
7. Once you completed your profile, you should reach a summary page entitled Your Farming Income and Expenses.
8. There is a section entitled Farm Assets. Here you will dispose of your assets by answering the questions as they appear. In the section, you will address each asset individually.
9. Reach out if you need additional help.

[FarmerBillRet]

Wow, really appreciate that easy to follow and concise answer, you've just taken half the load off my mind.

If you can help me as well with the second part of the scenario I will be eternally grateful. How do we show that the proceeds of selling the farm are offsetting our investment that we are not ever going to be able to collect on. Bad enough to have lost a lot of money without making it worse by having to pay tax on what we are able to collect back in the way of equipment and structures.

I am truly grateful for your willingness to share you knowledge.

[DaveF1006]

It depends. If you continue through the farm asset section, there will be a page entitled Describe This Asset. Here you will need to list all of your assets and assign your proceeds so each is accounted for in the sale.

1. For an example if you have $XXXX.XX in proceeds. If you have a barn or another outbuilding, you will check the box that says real estate. This is for non-residential real estate such as a barn or an other outbuilding.
2. You will answer a few preliminary questions until you reach a page entitled tell us about this XXXX asset. Here you will allocate a cost to the building and the land associated with it. Here is where you will enter the cost of that building and the land. Here we might say $XXXX.XX for building and XXXX.XX for land.  
3. Now the next screen is entitled, tell us more about this farm asset. Here you will say it was sold retired, destroyed......
4. Next it asks if there was special handling.  you can say no.
5. Next screen is the sales information.   Here you will enter the sales information on what you sold the building and barn for. To show a loss, the proceeds must be less than what you originally paid for it.
6. Now go back to the screen that says, Describe this asset and continue with the same procedure for all of your farm assets. 
7. Note if you sold the house you are living in, you need to report that as a sale of a personal residence. under federal>income and expenses>Less Common Income>sale of a home. This is treated differently from all your other farm assets as it is a personal residence.

[FarmerBillRet]

Thank you for the response.

Before we go any further I want to make sure we're on the same page. I'm using TT2020 Business tax for a LLC. I know you are describing the steps to take but I'm not seeing screens that mimic what you are entering in your post.

I'm starting clear up from a nasty virus, no not that one, but I am bit fuzzy still and may not be getting to the right screens to start. For instance I can't find a Rentals, Royalties, and Farm>Farm Income and Farm Rental listing in my program.

Hope you won't regret responding to my question.

[DaveF1006]

I apologize. If you are using Turbo Tax Business, it is a much different scenario.  To clarify, are you filing a partnership return using form 1065?

[Critter-3]

If you are filing a final 1065 or 1120S then I highly recommend you seek local professional assistance to get this done correctly especially if you have not kept good accounting of your basis in the business.

You have 60 days to get a refund of the TT program you will not need ...  

You can go here TurboTax CD/Download Refund Request Form to request a refund of the downloaded program  within 60 days of purchase. 

[FarmerBillRet]

That is correct.

We had a wonderful woman do our taxes up to 3 years ago. She became ill, went to spend her remaining time with family and has passed away. There is no one within 100 miles who does what she did. I've used her work as a template when I started using TurboTax Business and have kept the same records we kept during the years we worked with her. Just hoping I can wind things up with TurboTax and move on with our lives. If I need to use a professional I guess I will but it won't be anyone local and it won't be anyone who knows what our operation has been over the years.

[Critter-3]

Well since you have a good base and you have followed it then you may be able to do it yourself and TT doesn't support the business formats well so they may not be very helpful if you get in the weeds.   Of course these days help doesn't have to be local since much can be done thru the internet so that person 100 miles away that is familiar with farms may still be your best option even if you only pay them for some advice/assistance  or  just a review of the return before you file.