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phopkinsiii
Returning Member

Cost of Goods Schedule F

My wife and I are sold managers of an LLC. Our principle products sold are farm products. These include produce, eggs and jams and jellies.

We sell the jams and jellies under the farm name.

Should we claim the deduction for the costs of making the jams and jellies on schedule F or under COGS on form 1065? 

I have located the section on 1065 for COGS, but not on schedule F. I read one post that suggested listing the costs under supplies on schedule F. Would this be the best method?

Thanks

2 Replies
ColeenD3
Employee Tax Expert

Cost of Goods Schedule F

I am confused as to why you have both Schedule F and a Partnership. You have the choice of operating as a Partnership or a QJV. It seems that this is only one business. You don't report some information on one type of return and other information on a different type of return.

 

Farm Owned and Operated By Spouses

 

If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you can be taxed as a partnership and file Form 1065, or you each can file Schedule F (Form 1040) as a qualified joint venture. Qualified Joint Venture If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint return for the tax year, you can elect to be treated as a qualified joint venture instead of a partnership.

 

This election in most cases won't increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. For an explanation of “material participation,” see the Instructions for Schedule C (Form 1040), line G, and Line E, later, in these instructions.

 

Schedule F

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phopkinsiii
Returning Member

Cost of Goods Schedule F

Top line of IRS instructions for Schedule F: "...File it with form 1040, 1040(sr), 1040 NR, and 1065.

Further, this form was created by Turbotax during the interview when I answered the question as to whether we had farm income or expenses.

LLC is a common structure for farmers.

Did I miss something?

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