We have started a hazelnut orchard .We'll not see profit from these trees for about 5 years but will still have expenses. How do we deduct these expenses?

msjostr · ‎June 6, 2019

the expenses this year are for the trees, preparation of the land for planting, watering system, herbicide, fertilizer, a small farm off road farm vehicle for hauling equipment and supplies and a water tank - need to know also what forms to use and how to ( if needed) to separate from our personal taxes

Cattlerancher · ‎June 6, 2019

One more note. A NOL allows for carryback to previous years which requires amending your previous tax returns. Many/most don't want to do that. If you are one of them that don't want to carryback your loss you "must" include a statement in your 2016 tax return stating you elect to forego the carryback period for this NOL. This form is already prepared and available in your TurboTax. You just must make sure it's included in your return. Please review IRS Pub. 536 and use form 1045, schedule A to figure your NOL carryover.

Cattlerancher · ‎June 6, 2019

It appears you are using Home and Business, if so great! That's the best version to work with when operating a farm business. You will file a schedule F which will be included in your personal 1040 tax return. It is not unusual to have losses when you begin a for-profit business. This is called a Net Operating Loss (NOL). Enter your expenses in the Farm Income and Expense section. The trees and ATV should be depreciated as farm assets. TurboTax has preselected categories for depreciation so you use the correct recovery periods. Your other usual and ordinary expenses are entered under Farm Expenses.

Please see the attached page snips below;

View solution in original post

We have started a hazelnut orchard .We'll not see profit from these trees for about 5 years but will still have expenses. How do we deduct these expenses?

Deductions & credits

Deductions & credits