|
New IRS Auditor
<br />;�?J: c3, ! "ii rYP.,
<br />6 There are two aspects of
<br />Guidelines Can Affect Horse
<br />Owners and Small Livestock Farmers
<br />Uliane Vaught
<br />torney who specializes in
<br />valid and honorable live -
<br />his year, the IRS has
<br />Farm .hidustry Taxation,
<br />stock activities in an effort
<br />_Auded some new guide -
<br />this new focus on horse
<br />to earn at living at some -
<br />lines to its auditors that
<br />owners and livestock
<br />thing that everyone has
<br />are of interest to all. live-
<br />farmers is part of a com-
<br />the inherent right to do
<br />stock owners. The docu-
<br />plicated legal Issue. It
<br />under the general princi-
<br />ment, called a Market
<br />seems that, in Mr. Co-
<br />ples embodied in the prin-
<br />Segment Specialization
<br />han's words, "the IRS may
<br />ciples of the government
<br />Audit Technique program
<br />be taking a new approach
<br />under which we live,"
<br />Guide or MSSP, is used to
<br />that prejudices the• livelt-
<br />In general, the guide -
<br />train auditors who ana-
<br />hood of the horse and cat -
<br />lines_'do affect those small
<br />lyze horse and livestock
<br />tie industries, that re-
<br />business horse owners or
<br />tax returns. According to
<br />moves the freedom that
<br />livestock farmers who
<br />John Alan Cohan, an at-
<br />taxpayers have to pursue
<br />have twenty head or less.
<br />livestock farming that fall
<br />-under intense scrutiny fok
<br />all farmers, however. The
<br />first is the report of losses,
<br />and how the owner reports
<br />his gross profit. Especially
<br />in the case of horse own-
<br />ers, the auditors -simply
<br />are to assume that the tax-
<br />payer is lying and using
<br />the business as a tax shel-
<br />ter. =This assertion can also
<br />apply to .retired farmers
<br />who continue to raise a
<br />small herd ofcattle, or oth-
<br />er part -time farmers who
<br />raise small herds as well.
<br />"In small farm opera-
<br />tions," explained Mr. Co-
<br />e
<br />r
<br />f T i !:i l `0 ki
<br />` i i
<br />ban, in a recent phone in-
<br />tion" in the activity. '7n the
<br />terview, "the IRS is looking
<br />case of a large operation, it
<br />for a series of reported
<br />is understood -that the
<br />losses." They are also look -
<br />owner will delegate duties,"
<br />ing for false appraisals,
<br />said Mr. Cohan. "A compe-
<br />that purport to show how
<br />tent manager delegates to
<br />improvements In farm
<br />proper personnel," he con -
<br />buildings, fences, and
<br />tinued. "In the case of a
<br />landscaping can help to
<br />small operation, the owner
<br />increase the value of the
<br />is expected to be responsi-
<br />farmland. "It is extremely
<br />ble for the day to day care,"
<br />important that no small
<br />he said. In a Memorandum
<br />operation can be made to
<br />sent to this reporter, Mr.
<br />look like it supports a hob-
<br />Cohan quoted a recent
<br />by," explained Mr. Cohan.
<br />Senate Report defining
<br />The second aspect of the
<br />"material participation ".
<br />guidelines that affects all
<br />"The Senate Report said
<br />livestock farmers is the au -.
<br />that with respect to farm -
<br />ditor's view of the taxpay-
<br />ing and ranching activities,
<br />er's "material participa-
<br />defined in Section 464 (e)
<br />as 'the raising, shearing,
<br />.
<br />feeding, caring for, train-
<br />3140 Slack Folding Planters
<br />I RowW, 12 Row N, 12 Raw W
<br />i -38' and 38' -40') and 16.Row N
<br />3000 Pull Type P
<br />Interplant' Packs
<br />applyllquid /dry h
<br />Or, handle both
<br />Double Frame ®Ce
<br />4 Row N thr'u ll
<br />Bh
<br />Row Wto16a Row iN- withinterplant,Package5!f xx y I � W17
<br />atf" rfafi R ,c gv
<br />' or liquid /dry fertilizer options
<br />�•Xy '���z�'�/or�
<br />�`
<br />K Z E
<br />� teN j
<br />i, z
<br />Williamsburg, Iowa 52361 -0806 • U,S.A.° ;
<br />ty�kinzemfg:o
<br />t;
<br />See your local KINZE1° Dealer today for information on the Exclusive, patent
<br />complete line of KINZE' 3000 "Evolution Series" Planters. Packages or
<br />See Your KINW Dealer Today! KEN RNSIV eLEquipment Co.
<br />MARYLAND:
<br />CAMBRIDGE
<br />Cambridge Tractor Co.
<br />CHESTERTOWN
<br />W.N. Cooper & Son, Inc.
<br />POCOMOKE CITY
<br />NORTH CAROLINA:
<br />BRUNSWICK
<br />Johnson Equipment Co.
<br />COLERAIN
<br />Robertson Equipment, Inc.
<br />FAYETTEVILLE
<br />MONROE
<br />Brooks Sales, Inc.
<br />ROCKY MOUNT
<br />Hines Equipment Co.
<br />PENNSYLVANIA:
<br />LITITZ
<br />-
<br />z..
<br />;
<br />ctrl `
<br />WILLIAMSBURG
<br />Longeneckers, Inc.
<br />VIRGINIA:
<br />HARTFIELD .
<br />Fleet Brothers, Inc.
<br />ROCKY MOUNT
<br />Franklin Welding Equipment
<br />3, the purchase, sale and
<br />leasing of anneals, ma-
<br />chinery or equipment; 4,
<br />breeding and mating deci-
<br />sions; 5, the incursion of
<br />embryo transplant expens-
<br />es; and 6, the selection of
<br />third parties such as train-
<br />ers who may serve as man-
<br />agers of the animals and
<br />who act at the behest of the
<br />taxpayer."
<br />In order to meet the ex-
<br />pectations of the IRS, Mr.
<br />Cohan suggests that
<br />farmers have a formal
<br />written plan, which states
<br />the economic plan for the
<br />activity, and gives both
<br />short range and long -
<br />range forecasts as well.
<br />Another method is to cre-
<br />ate, with legal council, tax
<br />opinion letters, which can
<br />withstand the scrutiny of
<br />IRS auditors. An attorney
<br />can make recommenda-
<br />tions as to what does or
<br />does not conform to tax
<br />regulations. "This ap-
<br />proach shows a busi-
<br />nesslike purpose," ex-
<br />plained Mr. Cohan, "and
<br />there is expense attached
<br />to it." John Alan Cohan
<br />can be' reached at
<br />JohnAlanCohan@aol.com
<br />the herbal
<br />ALTERNATIVE
<br />for TODAY
<br />try the "UDDER" method
<br />No Withholding
<br />call for your FREE
<br />sample 1 (800) 507 -9361
<br />Synergy Animal
<br />Products, Inc.
<br />
|