What Form for Sales & Expenses for Maple Syrup Business?

[156church]

I am starting a maple syrup business using sugar maples on our farm. I have been reporting farm income and expenses on Schedule F: Profit or Loss from Farming. Would I report sales and expenses of maple syrup and maple products on Schedule F or another form?

Should I form a separate business for maple syrup & maple products and report as a separate business from our farm?

[LudwigVan_fan]

1.  Separate business

  I would consult a CPA or attorney and discuss whether a separate business would be necessary or not.  There are pros and cons and may somewhat depend on state and local laws.  Plus, do you want to separate it from your farm business as there may be potential liabilities with that business as opposed to the farm.

2.  The harvesting of the syrup is farming.  From what I've read it would appear the activities required to make syrup or sugar are probably not farming .   Farming is the raising of crops.  Cleaning, grading, etc. are farming activities.  But processing of products into a "refined" product is no longer farming.

I think that once you start processing the raw sap by heating and refining the raw sap into "refined" syrup and sugar, it is no longer farming.  For example, the cost of fuel used to heat the maple sap is not a farming expense and probably should be reported on Schedule C along with any other expenses and resulting income from maple syrup sales.

[156church]

Thank you for your comments.

I checked the 2022 NAICS database for "maple syrup" which indicates that maple syrup is in the same classification (111998) as maple sap. I believe 111998 is a farming classification. Correct?

[LudwigVan_fan · Accepted solution]

Here are some things to read

https://www.irs.gov/pub/irs-pdf/p225.pdf

https://www.irs.gov/pub/irs-pdf/i1040sf.pdf

https://www.irs.gov/pub/irs-pdf/f1040sf.pdf

Note part IV doesn't include 111998, but does include 111900

From  NAICS

Search results for: maple syrup

Number of records found: 5

• 111998 Maple sap concentrating (i.e., producing pure maple syrup in the field)
• 111998 Maple syrup (i.e., maple sap reducing)
• 111998 Syrup, pure maple (i.e., maple syrup reducing)
• 311999 Maple syrup mixing into other products
• 424490 Maple syrup merchant wholesalers

In my brief research, there does not appear to be a clear guideline.  Other than what I said before, generally processing a farm product other than cleaning, grading, storing, etc., generally takes it out of farming.  But, I suggest you check with your state for further rules, regulations, etc.  If you were to sell the pure maple sap, I would say it is farming.  But processing the sap into sugar and syrup...?????