IRS on processing firewood

[Droms Farm]

Hello, new to this site, lots of good information! Can anyone tell me, does processing and selling firewood qualify as a farming activity under IRS rules? Do you have to grow the wood on your own wood lot, can you harvest off other's woodlots and/or can you buy logs for processing and fall under IRS rules as a farming activity?

 

[leadarrows]

I have had this conversation with my local zoning board. Here anyway growing trees to sell the trees is farming. Fire wood and mulch are processed products not allowed on a farm with out a zoning variance and permits from IDEM. (Indiana Department of Environmental Management)

I can't help you with the IRS I never ask about that.

I know of several people who sell firewood and mulch that have not bothered with the rules around here and have gotten away with it for years.

As long as you don't write off equipment purchases for fire wood production as farm equipment I don't see the IRS giving a hoot about anything but their piece of your profits.

 

[Droms Farm]

Ok, that is helpful. I actually WANT to show a profit at some point in the future to meet the IRS requirements for farming so I can write off some equipment and start up costs this year (made too much money at my desk job), and it sounds like, from your post, that we can't categorize the equipment that we use for the firewood (i.e., the truck and trailer) as farm equipment. Lots to know about this, I guess. Thank you for the reply. Any other thoughts welcome!

 

[leadarrows]

Just understand I am a farmer not a tax lawyer. I would get some official advise before making any final decisions if I were you.

 

[deeker]

Just understand I am a farmer not a tax lawyer. I would get some official advise before making any final decisions if I were you.

But, your real world experience is worth a hell of a lot more than what you get paid.

Thanks for the information.

 

[Droms Farm]

Thank you, very helpful!

 

[kodiak]

A little late on my reply... but, why wouldn't the OP just handle this as a normal business rather than a farming enterprise?

As a stand-alone firewood business I'd thing he'd be able to write off the assets like he wants to do.

 

[leadarrows]

If it is a qualified farm expense you don't have to pay sells tax at the point of purchases.