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Posted by Ernie Klein on April 8, 2008, 7:26 pm
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> I have a question I haven't seen before. My son raises goats for an
> FFA/school project and it gets auctioned off at the County Livestock
> show. He received a 1099-MISC with the auction amount shown in box
> 3. The true net proceeds of the sale are actually in the negative due
> to all of the feed, supplies, etc. necessary to raise the animal.
I asked this same question back in February
http://groups.google.com/group/misc.taxes.moderated/browse_thread/thread/
dfc8efe865c56500/7ed3d05d2cc67371?lnk=st&q=#7ed3d05d2cc67371
>From my post on Feb, 13.
"I think I may have found the answer. Pub 225 "Farmer's Tax Guide", in
chapter 12, under "Self Employment Tax" of all places, it says that "4-H
or FFA project animals..." may be subject to income tax and should be
reported on line 21 of Form 1040 with a attached statement showing the
gross income and expense and that the net income should not be subject
to SE tax."
> My
> question is, the money for these supplies was actually paid by us, his
> parents....how do you handle this and is there ANY way for us to take
> advantage of these expenditures as my husband and I owe the IRS on our
> joint return? ANY help would be appreciated!
AFAIK the only thing that can go on a parents return is the "kiddy tax"
which must be only interest or dividend income under a certain amount,
the 1099-MISC from the auction same does not qualify.
I know that this year my grandkids have already spent much more to
purchase their show beef and feed ($16/50 lbs. and they eat 25 lbs. a
day) than they will ever recover so they will probably have a large loss
after the sale in August.
I also pay for all of the feed and supplies but it is a loan to their
project, to be paid back out of their profit (if any).
--
-Ernie-
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