Hi Mark and Matt,
I love your shows, and am so happy I’ve sacrificed my music and sports talk radio for educational podcasts on my daily commute. I’m a W-2 employee with a handful of rentals on the side (including in my self-directed IRA at your firm!), and in 2021 my wife and I purchased a 4-acre property, which our family now lives on. In 2022 we started trying to monetize our property by getting chickens and goats, and harvesting fruits and vegetables. So far, the only revenue-producing activities have been the selling of eggs to neighbors and coworkers, plus the cost savings of not buying eggs and produce at the store (and not having to mow our pastures while the goats do their thing). We envision getting more chickens, and also breeding and selling some of our goats and a few beef cows which we have not bought yet. I think its realistic that we could bring in up to $5K of revenue in the next year (maybe netting a 40% margin). I think the IRS would classify this as a “hobby farm”, as I make a six-figure salary which is what primarily supports our family. At what point would you suggest I do a Schedule F for the farm activities? I don’t believe losses from a hobby farm are deductible, so if I should be filing a Schedule F with this small amount of farm activities, I’m hopeful I could find enough mileage and home/property related expenses I could apportion to the farming activities to bring my income down to $0. I don’t want to not report this activity, but I also don’t see the need to report it if my expenses exceed my revenue, yielding $0 from the Schedule F to my 1040.
Thanks in advance!