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posted Jun 6, 2019 3:02:25 AM

Do I still file a schedule F if I have no income but only purchases/expenses for a first year farm/ranch?

Purchases include cattle, truck, stock trailer, and fencing repair supplies.

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1 Replies
Expert Alumni
Jun 6, 2019 3:02:27 AM

Yes, if your farm is operational and you are engaged in this activity to produce a profit.  It's not unusual to have a loss in the first year as you begin operations and gain momentum.  The IRS determines profit intentions by the definition below.

Presumption of profit. Your farming or other activity is presumed carried on for profit if it produced a profit in at least 3 of the last 5 tax years, including the current year. Activities that consist primarily of breeding, training, showing, or racing horses are presumed carried on for profit if they produced a profit in at least 2 of the last 7 tax years, including the current year.

IRS publication 225 is specifically written for farmers and will provide more guidance.  Farmer's Tax Guide