Last tax question, ouch.. hey I felt that!

Dave from MN · Feb 24, 2011

anyway, I buy all my fertlizer from one co-op, they do all my spraying, lime, and soil services. I pay the bill 2-3 times per year. Can I put the total of these payments under Fertilizers and Lime, or under Custom hire, or do I need to break down all the invoices and seperate the Fert, lime, application, soil test,chemical cost, spreader costs, etc, etc? Thats the last question, I hope. Getting close to done.

Allen Goodman · Feb 24, 2011

Depends. Are you buying the fertilizer/lime separate and then have the coop apply? Or is their invoice including the materials and labor?

GordoSD · Feb 24, 2011

I break mine down into major groups: Fertilizers, pesticides, fuel, equipment repairs, custom hire, misc etc. I don't break it down except by date and the account (provider).I do keep the receipts though. Just stack them on a spindle after they are recorded. That way everything is in reverse chronological order.

Bob Bancroft · Feb 24, 2011

Greetings.
I can only tell you what I do, right or wrong.
I used to lump it all together. But now I have one page divided into three columns. So when I pay a bill I separate it into "fert", or "chem", or "custom hire".
It could get ridiculous after a while, as I suppose fert. delivery could be put under "freight&trucking", and if you rent a spreader it could be put under"rent".
It's all clearly legit. farm expense, and comes out the same. But it would be interesting to hear from someone who has been audited if those details were covered.

Bob Bancroft · Feb 24, 2011

I forgot to add- I bought a corn head from an out of state dealer. It was priced "in my yard". I wrote out one check- to the dealer. I knew the freight amount, and it was separated on the invoice. I would guess different IRS people would differ on how to record that.

Mike (WA) · Feb 24, 2011

Are you using Quicken or Quickbooks? It really is a time saver, and Quicken, especially, is easy to learn to use. Just like entering stuff in a checkbook registry. I set it up with the same categories as are on the IRS Schedule F, plus add those that aren't included, like farrier. You can "split" a transaction as you enter it, into the various categories. And at the end of the year, print out a "report" with all your categories of income and expense.

I just use it for farm, not all expenses. Its set up like a checkbook registry, and if you put all your deposits and all your checks in, you can use it to balance your checkbook. But I don't bother with household expenses (except tax deductible stuff)- It gets to be just too much bother if you're putting everything in.

Anonymous-0 · Feb 24, 2011

I keep records of everything seperate, I have a list of each implement, tractor etc and underneath that I put in what i spent on it for example under haybine I might have to put down $25.00 for sections or something. I also keep records of every fields individual expense but that is just so I have a record of where I need to be to profit on a certain field. As far as taxes go I dont do my own, but most things get lumped as an operating expense. I just keep everything seperate for personal reasons and to protect against audits if they were to occur.

Anonymous-0 · Feb 24, 2011

Since both columns or on schedule F and both subtract from the bottom line I don't see why you would have to split out the spreading cost from the fert. especially since the spreading cost is much smaller than the fert. If the custom work were more than the materials I would show it under custom work.

John (C-IL) · Feb 24, 2011

Put it all in the fert/chem category. The one exception could be the lime that can be depreciated if it would have a tax advantage. If you do a similar dollar amount evry year it is simplest to write it all off in one tax year.

JMS/.MN · Feb 24, 2011

Dave, with all due respect- you try to complicate things WAY too much. I still do my records by hand, almost 40 years with the MN Farm Account book. Puters are fine, especially when it comes to enterprise analysis, but I like hard copies for bookkeeping, and I can flip pages to find the totals for every enterprise. Been fine with my CPA firm for 22 years- no audits. Fertilizer and chem is ok in two totals, or even one- they are both crop expenses. Have never broken it down beyond that, like you are asking. It sounds like you do your own taxes- I would never do that...,simply don"t know enough about tax law to consider that, and the CPA cost is more than worth it. In going through his packet each year, I know I couldn"t keep up with that, and know that his cost is way less than what I would miss out on, by myself.

M Nut · Feb 25, 2011

Exactly!!! It is sure an expensive hour at the CPA, but it is also the best $175 I spend each year. I spend that much to get much more in return than I'd ever find on my own.

Last tax question, ouch.. hey I felt that!

Dave from MN

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Allen Goodman

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GordoSD

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Bob Bancroft

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Bob Bancroft

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Mike (WA)

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Anonymous-0

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Anonymous-0

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John (C-IL)

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JMS/.MN

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M Nut

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