Texas/New Mexico Stateline | Sorry to belabor the point. The thread below about tax deductions for retired farmers, this was posted by Jake our resident AgTalk pro-bono tax expert. :
The applicable portion of regulation 1.48-1 is as follows:
which is (i) tangible personal property, (ii) other tangible property (not including a building and its structural components) but only if such other property is used as an integral part of manufacturing, production, or extraction, or an integral part of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services by a person engaged in a trade or business of furnishing any such service
The problem portion is the last phrases......."by a person engaged in a trade or business of furnishing any such service.....".
Since a landlord receiving shares, even though not necessarily participating materially in the production so cannot be called a "farmer"-------- he is still "...engaged in the trade or business of furnishing any such service..."
I have often wondered when it comes to "machine work" we farmers do, how the IRS would look at that in various scenarios? Suppose a person has an excavator on their farm for putting in tile or irrigation , and they help their buddy down the road dig a basement for a personal home with that said machine. Buddy pays for "machine hire" for the work. I think nearly everybody would put that on Schedule F, and not bother to set up a Schedule C as a separate business? Not bother with quarterly payments, etc. Would that be kosher? I'm thinking coming right down to brass tacks, the IRS would want a person to separate that income as a separate business.??
Trucking farm products for hire, using a large mower dedicated for the farm to mow a few lots in town for a realtor buddy, etc. ????
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How broadly can "farming" be defined for tax purposes?
