Are there any income tax benefits to homesteading if you have 5 acres? Can I file as a farm? Help me with good advice or at least enough to guide me to one who knows the best approach.

-- Everett Imperato (imperato@i-55.com), August 14, 1999

Answers

Unless IRS guidelines have changed, you will need to show a profit from farming in 3 out of 5 years, and must file a 7 year plan. I suggest that you contact IRS for forms to look over, etc. For some of us that do scrounge a living from a small acreage, the deductions are almost a necessity that helps us get by.

-- greenbeanman (greenbeanman@ourtownusa.net), August 14, 1999.

Greenbeanman is correct with his answer of 3 years profit out of 5--that's true as far as code goes. But if you can show (if challenged) that you are attempting seriously to make a living (not 'gentleman farming') you can go many years. I've been a tax accountant for a long, long time and have yet to see the service change a Schedule F into hobby category when it is the principal means of earning a living. (As opposed to the office worker who has a few acres and keeps a cow, plants a patch and buys some equipment he wanted anyway, then calls it farming and writes off the big losses he accumulates year after year) It works especially well if one spouse farms and the other spouse works elsewhere for wages (or is otherwise self employed) The employed spouse brings home bucks to dhelp keep the farm running and the farm losses can be taken against the earned income.

-- Karleene Morrow (karly@pioneer.net), September 01, 1999.