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Old 06-08-2010, 09:38 PM   #21
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Anything he makes is gravy. He was already planning to give away the excess hops instead of selling them, so I don't even see the point of this debate. He is still recovering part of the expenses even if he pays taxes.

I don't see where the hours of paperwork comes from. It takes like 10 minutes that he might even already do. Set aside receipts for fertilizer, etc. in a separate envelope. At the end of the year, add up the additional revenue from sales, and add up the expense receipts. Subtract expenses from revenue. If he made extra income, then add it on the appropriate line. If not then it's a moot point.
It's probably like a farm, you have to be able to show you are trying to make a profit (If you aren't making a profit after 5 years and they audit you?), so you have to keep track of miles driven, gas, vehicle expenses, hours worked, any other expenses, i.e. fertilizer, new hoe, oast materials, electricity used to dry hops, phone calls made for sales, advertising expenses, Land and equipment depreciation, etc, etc, . . . . . . . . not sure though.
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Old 06-08-2010, 09:48 PM   #22
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It's probably like a farm, you have to be able to show you are trying to make a profit (If you aren't making a profit after 5 years and they audit you?), so you have to keep track of miles driven, gas, vehicle expenses, hours worked, any other expenses, i.e. fertilizer, new hoe, oast materials, electricity used to dry hops, phone calls made for sales, advertising expenses, Land and equipment depreciation, etc, etc, . . . . . . . . not sure though.
There is a caveat in the code for "hobby" vs "business", but I am not a tax professionaly and I am guessing most others aren't either. Making this distinction and itemizing and recording properly is not trivial when you second guess everything you are doing due to lack of experience or knowledge. And this is why it adds time and cost to the average taxpayer that knows how to file their personal taxes and outside of that... good luck.

Hell, you should try having to file taxes with a spouse on federal research grants. I swear to God they change the rules for reporting this income EVERY damn year.
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Old 06-08-2010, 11:08 PM   #23
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^^^ I sir am a pro and you are making way more complicated than it needs to be.

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Old 06-08-2010, 11:31 PM   #24
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It's probably like a farm, you have to be able to show you are trying to make a profit
Only if you are trying to make it into a business and file as a business.


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There is a caveat in the code for "hobby" vs "business", but I am not a tax professionaly and I am guessing most others aren't either. Making this distinction and itemizing and recording properly is not trivial when you second guess everything you are doing due to lack of experience or knowledge.
How about if you sell your used brewing equipment on craigslist? You should be filing that on your taxes, too. Is that as complicated as you are trying to make it? It's ONE LINE.
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Old 06-09-2010, 01:16 AM   #25
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Just give them to me man, I'll sort it out...

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Old 06-09-2010, 02:42 AM   #26
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Wow.

I had no idea what sort of discussion would occur while I went to work.

I know I've planted more than I can use and my goal has always been "More hops than I can use."

When the Local Store pitched the idea I got to thinking, "I'd love a 'free' bag of grain".

Again I'm shooting for a 55lbs bag of grain. The local store asked me what I know about 'the law" and I said, "I dunno."

I'm not sure what the whole sale price on leaf hop is, but if he wants to say whole hop leaf is worth X and X is maybe half the retail price of a bag of grain. That's still fine by me.

I guess I wanted to go back to the local store and say "There are the rules we are suppose to follow so you don't get in trouble.", but it sounds like there are no rules we obligated to besides tax law. I owned a business once, I get tax law.

So it doesn't appear there are a series of I dunno, "edible saftey laws" that hops fall under, that my local store needs to worry about. Beyond that, he needs to document the purchase and I need to document the sale to be 'legit'.

And if we happen to barter grain for hops, thats his problem, and mine if he's caught.

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Old 06-09-2010, 11:33 AM   #27
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I didnt think you needed to file taxes unless your income was more than $400 or something like that...

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Old 06-09-2010, 02:02 PM   #28
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I didnt think you needed to file taxes unless your income was more than $400 or something like that...
Total income. The sale of hops would need to be added to his regular income tax as additional income.

I'd be more worried about the LHBS than someone's personal income tax. They tend to look at receipts for a business a lot closer than the odd sale from a private citizen. But if the business adds the sale into their books, then the IRS can track the sale back to the grower and wonder why it didn't show up on their return.

I think the easiest thing it so simply claim it as additional income. We're probably not talking about too much money here.
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Old 06-09-2010, 02:20 PM   #29
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... If they purchase from you, and put it on the books, then legally you have to claim this as income under tax law.
...
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here's a radical idea...don't break the law!

You have to report the income...all/any income you make ...always.

You can report your expenses against income as well. But cheating on taxes is no different than stealing from a store. If you report your income you can deduct fertilizers, utilties, portion of property taxes ...etc. If its worth doing its worth doing right...
Ding! Sell your hops. Deduct your purchases for hops-growing -- all of them. Did you buy a shovel? Deduction! Wood and twine? Deduction! Build a drying frame? Deduction! Fertilizer? Deduction! Portion of the water bill that goes to hops? Deduction!

The best part is, it's entirely above-board, legal, and can even end up LOWERING your tax bill, if your hobby business shows a loss. Just keep good records, and plan on taxes being more complicated. The top-end version of Turbotax has worked fine for us with a rental property and a hobby business.
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Old 06-09-2010, 05:34 PM   #30
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I think if you were to sell them for retail sale, you'd want to get a chemical analysis done on that crop to determine the AA% and whatnot. Dunno what that would cost, but I wouldn't just buy "hops from this guy's yard" at a store without knowing that kind of information.
I was just thinking the exact same thing
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