Can we claim our children's 4-H educational livestock projects? We had no fair, however we had many expenses to raise the animals.

[vws2boys1]

On a normal year most 4-h youth sell the animals and receive a 1099 form. 2020 was very abnormal.

[macuser_22]

There is no deduction but expenses can be deducted from the income received from the sale of the livestock to reduce the taxable amount.

quote from pub 225
4-H Club or FFA project.

4-H Club or FFA project. If an individual participates
in a 4-H Club or National FFA Organization
(FFA) project, any net income received
from sales or prizes related to the project may
be subject to income tax. Report the net income
as “Other income” on Schedule 1 (Form 1040),
line 8. If necessary, attach a statement showing
the gross income and expenses. The net income
may not be subject to SE tax if the project
is primarily for educational purposes and not for
profit, and is completed by the individual under
the rules and economic restrictions of the sponsoring
4-H or FFA organization. Such a project
is generally not considered a trade or business.
For information on the filing requirements and
other tax information for dependents, see Pub.
929.

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

[vws2boys1]

Since we were unable to have a sale, how does that work? 
Thank you for your help!

[RayW7]

Unless your son has a profitable bona fide business (e.g., raising and selling livestock as part of a 4-H project), the expenses for his 4-H project are probably considered “hobby” expenses for tax purposes and would not be deductible. If, as a parent of a 4-H’er, you’ve become a volunteer leader, you may be able to deduct certain expenses as a volunteer.

See IRS Publication 17 for details: www.irs.gov/pub/irs-pdf/p17.pdf.

If you have income from the project, then you can deduct the expenses against the income to arrive at net income.

[macuser_22]

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@vws2boys1 wrote:

Since we were unable to have a sale, how does that work? 
Thank you for your help!

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If there was no taxable income from selling the livestock then there is no income to deduct from.   A deduction only reduces the amount of taxable income and tax.   No income no tax anyway.

[TXcrude]

Besides the expenses for feed and supplements could you also claim the mileage/fuel and tolls for once or twice daily drives to the barn? 28 miles round trip and $1,62 x 2 per day?

What about entry fees for livestock shows and associated cost of travel including hotels?

[MonikaK1]

You can deduct as charitable contributions certain travel, mileage, and fees if you incur them in the course of giving services to a charitable organization. See IRS Publication 526 (excerpts below) and this TurboTax tips article for details.

You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. You can't deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance.

If you don't want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution.

You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate.

Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a qualified organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the qualified organization and the organization pays for your travel expenses.

Amounts you spend performing services for a charitable organization may be deductible as a contribution to a qualified organization. If so, your deduction is subject to the limit applicable to donations to that organization. For example, the 30% limit applies to amounts you spend on behalf of a private nonoperating foundation.

If you give services to a qualified organization and have unreimbursed out-of-pocket expenses, considered separately, of $250 or more (for example, you pay $250 for an airline ticket to attend a convention of a qualified organization as a chosen representative), related to those services, the following two rules apply.

• You must have adequate records to prove the amount of the expenses.
• You must get an acknowledgment from the qualified organization that contains:
  • A description of the services you provided,
  • A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred,
  • A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and
  • A statement that the only benefit you received was an intangible religious benefit, if that was the case.

[TXcrude]

IRS Publication 225 states "4-H Club or FFA project. If an individual participates in a 4-H Club or National FFA Organization (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Report the net income as “Other income” on Schedule 1 (Form 1040), line 8z. If necessary, attach a statement showing the gross income and expenses. The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization"

If I incurred a net loss do I put $0 or a negative number as net income as “Other income” on Schedule 1 (Form 1040) ?

Why does this have to be so complicated for a FFA or 4H project?

[TXcrude]

Do I claim the cost of the animal where I got the proceeds in 2023, however, the animal was purchased in 2022 or can I offset the income from the animal sale against the purchase of another animal in the same year (2023)?

[MonikaK1]

You would only enter any net income from the nonprofit activity on Schedule 1. You can deduct the purchase price of the animal from the proceeds of the sale of that animal.

You would not deduct any expenses from income reported on Schedule 1 that you already claimed as a charitable deduction.

See this excerpt from IRS Publication 225:

4-H Club or FFA project.

If an individual participates in a 4-H Club or National FFA Organization (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. Report the net income as “Other income” on Schedule 1 (Form 1040), line 8z. If necessary, attach a statement showing the gross income and expenses. The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. Such a project is generally not considered a trade or business.