Deducting Home Brew Expenses

Homebrew Talk - Beer, Wine, Mead, & Cider Brewing Discussion Forum

Help Support Homebrew Talk - Beer, Wine, Mead, & Cider Brewing Discussion Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.
Gray area line of thinking....
+ Inconvenience of being audited....
+ Penalties & fees if the IRS determines that you owe....
+ Extra scrutiny in following years by IRS (increased likelihood of being audited....again.)....
* How Much Pain You Can Endure
= Tolerance to Try Writing Homebrewing Expenses Off
 
Could I get away with writing off 50% of my all grain and yeast costs?

Seems to me that this would fall under the same law that prevents (some of) us from traveling with our homebrew and serving at a party or event. State law dictates some of this; "Family use and home consumption" is what I come across. The loopholes are so tiny that it would be painfully obvious if a person attempts to use them. Bottom line, common sense of the law says the final product is for personal enjoyment only.

Now a savvy homebrewer may develop a business plan under their LLC that includes grain, hops, or yeast that may be written off due to (place your legal loss excuse here). I have an idea that I am working on which may carry this type of expense for Hops and Grain. Now to get a profit on my LLC and actually have something to write off is another challenge.
 
LOL, or you could just skip the middle man, and ask the ATF, and IRS.....


This is what the IRS says as of last year for the 50% deduction

There is concern that if a meal is provided solely for the purpose of entertainment, it would become nondeductible as well. The IRS’ minimum standards for a meal still allows the deduction. The standards include the following:

  • The meal is not lavish/extravagant.
  • A substantial business discussion took place before, during, or after the meal
  • There was a business purpose for the meal.
  • The cost of the meal was not included in an entertainment-type ticket.
  • An owner of the business attended the meal.
Therefore, meals can be deducted as a business expense if they are directly related or associated with the active conduct of a trade or business (with a valid purpose and documentation). Once this test is established, the expense falls into two categories: 50 percent deductible or 100 percent deductible. There is an additional caveat that if a meal is considered “lavish and extravagant” under the circumstances, the extra portion attributable to extravagance is not deductible at all. Meals with employees or business partners are only deductible if there is a direct or indirect business purpose. I’ve listed out common items that fall into each category to press down your taxable income!

https://proconnect.intuit.com/taxpr...-that-are-fully-deductible-yes-they-do-exist/
 
Right exactly, it kind of falls into a grey area by my thinking.

No where in our written or published marketing, advertising or anywhere does it mention ANYTHING about "free" food or drinks so IMO it should not be considered a core business function or something we use "lure" clients. Its simply just something we provide to existing clients\renters unannounced to seperate ourselves from our competition or "sweeten" the deal off the record if you will.

Just looking to offset a couple thousand dollars a year for what is essentially giving away my home brew as an off the record perk for our loyal clientele
What state do you live in?
 
What state do you live in?

A state I can't get anything over 5% on tap.......Utah

There's a lot of support and legal backing for "cottage food production" which essentially means making food at home and then selling at local markets legally or using them for your own business needs.
 
Now let’s say you own a homebrew shop. As the owner of said shop you are expected to know things to provide advice to your clients. So you would brew with new ingredients to understand them and to develop recipes for kits you would sell, etc. Maybe there you could find some area where you might have a legitimate write off for some ingredients. But then you are buying your ingredients at cost, so the write offs would be smaller. Buying my ingredients at cost was about the only benefit I got from my store.
 
A state I can't get anything over 5% on tap.......Utah

There's a lot of support and legal backing for "cottage food production" which essentially means making food at home and then selling at local markets legally or using them for your own business needs.
Well, I think you're out of luck. Understanding that I am not a lawyer nor do I play one on TV, Utah law is very specific about homebrew outside the home. Quoted here for your convenience:

32B-11-202. Exemption for manufacture in personal residence of fermented beverage.


(1) As used in this section, “fermented alcoholic beverage” means:
(a) beer;
(b) heavy beer; or
(c) wine.
(2) An individual may without being licensed under this chapter manufacture in the individual’s personal residence a fermented alcoholic beverage if:
(a) the individual is 21 years of age or older;
(b) the individual manufactures no more than:
(i) 100 gallons in a calendar year, if there is one individual that is 21 years of age or older residing in the household; or
(ii) 200 gallons in a calendar year, if there are two or more individuals who are 21 years of age or older residing in the household;
(c) the fermented alcoholic beverage is manufactured and used for personal or family use and consumption, including use at an organized event where fermented alcoholic beverages are judged as to taste and quality; and
(d) the fermented alcoholic beverage is not for:
(i) sale or offering for sale; or
(ii) consumption on a licensed premise.
(3) An individual may store a fermented alcoholic beverage manufactured as provided in Subsection (2) in the individual’s personal residence.
(4) A fermented alcoholic beverage manufactured in accordance with Subsection (2) may be removed from the premises where it is manufactured:
(a) for personal or family use, including use at an organized event where fermented alcoholic beverages are judged as to taste and quality;
(b) if the fermented alcoholic beverage is transported in compliance with Section 41-6a-526; and
(c) if the fermented alcoholic beverage is removed only in the following quantities:
(i) for personal and family use that is unrelated to an organized event where fermented alcoholic beverages are judged as to taste and quality, the quantity that may be possessed at one time is:
(A) one liter of wine for each individual who is 21 years of age or older residing in the household;
(B) 72 ounces of heavy beer for each individual who is 21 years of age or older residing in the household; or

(C) 72 ounces of beer for each individual who is 21 years of age or older residing in the household; and
(ii) for on-premise consumption at an organized event where fermented alcoholic beverages are judged as to taste and quality, the quantity that may be removed for each organized event is:
(A) one liter of wine for each wine category in which the individual enters, except that the individual may not remove wine for more than three categories for the same organized event;
(B) 72 ounces of heavy beer for each heavy beer category in which the individual enters, except that the individual may not remove heavy beer for more than three categories for the same organized event; or
(C) 72 ounces of beer for each beer category in which the individual enters, except that the individual may not remove beer for more than three categories for the same organized event.
(5) A partnership, corporation, or association may not manufacture a fermented alcoholic beverage under this section for personal or family use and consumption without obtaining a license under this chapter, except that an individual who operates a brewery under this chapter as an individual owner or in partnership with others, may remove beer from the brewery for personal or family use in the amounts described in Subsection (2)(b).
 
Last edited:
Well, I think you're out of luck. Understanding that I am not a lawyer nor do I play one on TV, Utah law is very specific about homebrew outside the home. Quoted here for your convenience:

32B-11-202. Exemption for manufacture in personal residence of fermented beverage.


(1) As used in this section, “fermented alcoholic beverage” means:
(a) beer;
(b) heavy beer; or
(c) wine.
(2) An individual may without being licensed under this chapter manufacture in the individual’s personal residence a fermented alcoholic beverage if:
(a) the individual is 21 years of age or older;
(b) the individual manufactures no more than:
(i) 100 gallons in a calendar year, if there is one individual that is 21 years of age or older residing in the household; or
(ii) 200 gallons in a calendar year, if there are two or more individuals who are 21 years of age or older residing in the household;
(c) the fermented alcoholic beverage is manufactured and used for personal or family use and consumption, including use at an organized event where fermented alcoholic beverages are judged as to taste and quality; and
(d) the fermented alcoholic beverage is not for:
(i) sale or offering for sale; or
(ii) consumption on a licensed premise.
(3) An individual may store a fermented alcoholic beverage manufactured as provided in Subsection (2) in the individual’s personal residence.
(4) A fermented alcoholic beverage manufactured in accordance with Subsection (2) may be removed from the premises where it is manufactured:
(a) for personal or family use, including use at an organized event where fermented alcoholic beverages are judged as to taste and quality;
(b) if the fermented alcoholic beverage is transported in compliance with Section 41-6a-526; and
(c) if the fermented alcoholic beverage is removed only in the following quantities:
(i) for personal and family use that is unrelated to an organized event where fermented alcoholic beverages are judged as to taste and quality, the quantity that may be possessed at one time is:
(A) one liter of wine for each individual who is 21 years of age or older residing in the household;
(B) 72 ounces of heavy beer for each individual who is 21 years of age or older residing in the household; or

(C) 72 ounces of beer for each individual who is 21 years of age or older residing in the household; and
(ii) for on-premise consumption at an organized event where fermented alcoholic beverages are judged as to taste and quality, the quantity that may be removed for each organized event is:
(A) one liter of wine for each wine category in which the individual enters, except that the individual may not remove wine for more than three categories for the same organized event;
(B) 72 ounces of heavy beer for each heavy beer category in which the individual enters, except that the individual may not remove heavy beer for more than three categories for the same organized event; or
(C) 72 ounces of beer for each beer category in which the individual enters, except that the individual may not remove beer for more than three categories for the same organized event.
(5) A partnership, corporation, or association may not manufacture a fermented alcoholic beverage under this section for personal or family use and consumption without obtaining a license under this chapter, except that an individual who operates a brewery under this chapter as an individual owner or in partnership with others, may remove beer from the brewery for personal or family use in the amounts described in Subsection (2)(b).

Thanks for that but to me it looks like whole lot of grey area the federal IRS likely doesn't care about

I'm not super concerned about running foul of Utah state laws..........you'd be surprised how much they don't care about what businesses do as long as your paying taxes.
 
You would be very surprised at what the IRS does and doesn't care about. Having that mentality is what gets people in trouble.

Totally understand where your coming from but we write off A LOT of food and expenses, this would be a very very small slice of that and according to the IRS laws I posted above were within our rights to claim it the 50% or at least enough to argue it to an auditor.....I'm not concerned about the state of Utah.
 
Totally understand where your coming from but we write off A LOT of food and expenses, this would be a very very small slice of that and according to the IRS laws I posted above were within our rights to claim it the 50% or at least enough to argue it to an auditor.....I'm not concerned about the state of Utah.

Like @BrewnWKopperKat said I'd verify with a lawyer/accountant. Getting your business/personal taxes audited is not a pleasant experience. I know from personal experience, had to get a lawyer and do the whole 9.
 
Like @BrewnWKopperKat said I'd verify with a lawyer/accountant. Getting your business/personal taxes audited is not a pleasant experience. I know from personal experience, had to get a lawyer and do the whole 9.

Completely agree...my previous comment had quite a bit of angst behind it. Audited one year....you owe. Verified w/CPA...yeah...you're screwed. About 6 months later...got another letter in the mail....for the next year's taxes...rinse..repeat....ugh.

Frickin...Frack...🤬
 
Back
Top