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Posted by SMF on May 9, 2008, 12:16 pm
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In 2006 I started the process of starting a dog breeding business. I
purchased a couple dogs, built a large kennel area, and started the
process of training and showing the dogs. This obviously cost a lot,
including the vets, trainers, stud fees, food, supplies, licenses,
show fees etc. I did not include it on my 2006 or 2007 return because
I had not started earning income yet. I had already spent $40,000 by
2008.I am treating the whole thing like a business, separate accounts,
advertising, etc. Anyway,here are my questions:
1- Can I go back and ammend those returns? Business, vs hobbie
issues?
2- Schedule C for those years with no income?
3- Show fees are very large, but without the champion lable these dogs
will not produce much income.
4- Depreciation of my dogs, the purchased ones?
Thanks!!!!!
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Posted by Paul Thomas, CPA on May 9, 2008, 1:22 pm
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> In 2006 I started the process of starting a dog breeding business. I
> purchased a couple dogs, built a large kennel area, and started the
> process of training and showing the dogs. This obviously cost a lot,
> including the vets, trainers, stud fees, food, supplies, licenses,
> show fees etc. I did not include it on my 2006 or 2007 return because
> I had not started earning income yet. I had already spent $40,000 by
> 2008.I am treating the whole thing like a business, separate accounts,
> advertising, etc. Anyway,here are my questions:
> 1- Can I go back and ammend those returns? Business, vs hobbie
> issues?
> 2- Schedule C for those years with no income?
> 3- Show fees are very large, but without the champion lable these dogs
> will not produce much income.
> 4- Depreciation of my dogs, the purchased ones?
It all sounds like, at best, start-up costs, which are capitalized and
amortized (IRS speak for expensed over time) once you begin the business,
meaning once you actually have a product or service to sell. When that
happened is a matter for you to discuss with your tax advisor.
--
Paul A. Thomas, CPA
Athens, Georgia
--
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by removeps-groups@yahoo.com on May 11, 2008, 8:02 pm
Please log in for more thread options wrote:
> > In 2006 I started the process of starting a dog breeding business. I
> > purchased a couple dogs, built a large kennel area, and started the
> > process of training and showing the dogs. This obviously cost a lot,
> > including the vets, trainers, stud fees, food, supplies, licenses,
> > show fees etc. I did not include it on my 2006 or 2007 return because
> > I had not started earning income yet. I had already spent $40,000 by
> > 2008.I am treating the whole thing like a business, separate accounts,
> > advertising, etc. Anyway,here are my questions:
> > 1- Can I go back and ammend those returns? Business, vs hobbie
> > issues?
> > 2- Schedule C for those years with no income?
> > 3- Show fees are very large, but without the champion lable these dogs
> > will not produce much income.
> > 4- Depreciation of my dogs, the purchased ones?
>
> It all sounds like, at best, start-up costs, which are capitalized and
> amortized (IRS speak for expensed over time) once you begin the business,
> meaning once you actually have a product or service to sell. When that
> happened is a matter for you to discuss with your tax advisor.
Does one have to file a Schedule C or something for years 2006, 2007,
to list the costs that will be amortized when business starts? I'm
not aware that this is necessary, but it seems it you amortize start-
up costs from two years ago, then maybe it is a nice idea to file a
form with your 2006 and 2007 tax returns.
And how does one determine the start date of the business? Is it the
date when you are ready to sell dogs? If this is the case, and for
some reason you did not sell any dogs, then you're still open for
business, and all the costs such as salaries for vets and trainers,
dog medicines, etc would go on Schedule C as expenses -- that is,
deducted all at once instead of over 5 or 15 years.
What is the depreciation life of a dog?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by Paul Thomas, CPA on May 12, 2008, 8:55 am
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> Does one have to file a Schedule C or something for years 2006, 2007,
> to list the costs that will be amortized when business starts? I'm
> not aware that this is necessary, but it seems it you amortize start-
> up costs from two years ago, then maybe it is a nice idea to file a
> form with your 2006 and 2007 tax returns.
If you weren't in business at that time, then don't file a Schedule C.
There's be no point in it, as there would be no deductrions.
> And how does one determine the start date of the business?
It's generally when you are ready, willing and able to make sales, provide
the goods and services, etc.
It's proven out with advertising, a sales receipt, etc.
> Is it the date when you are ready to sell dogs?
If that's all you did for revenues, then yes.
> If this is the case, and for some reason you did not
> sell any dogs, then you're still open for business,
> and all the costs such as salaries for vets and trainers,
> dog medicines, etc would go on Schedule C as
> expenses
Yes.
But you have an up-hill battle if you never make any sales. Then the whole
idea of you being in a business comes into question.
--
Paul A. Thomas, CPA
Athens, Georgia
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Harlan Lunsford on May 12, 2008, 2:17 pm
Please log in for more thread options removeps-groups@yahoo.com wrote:
(snipped....
>
> What is the depreciation life of a dog?
>
7 years. Now here's the rub. To use section 179 to max out your
deduction for total cost of dog, it must be used for year dog is
placed in service. If you didn't file schedule c's for first several
years, then you start to use depreciation for breeders in first year
of schedule c use. Of course after business opens, any subsequent
purchase of dogs gets the immediate write off.
Oh, and the life is 7 years.
ChEAr$,
Harlan Lunsford, EA n LA
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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