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* This is an excerpt from Business or Hobby? Active or Passive?

The deduction of expenses from an activity that is not engaged in for profit generally is limited to the amount of gross income derived from that activity. In other words, a loss from an activity that a taxpayer does not engage in for profit cannot be used to offset the other income of the taxpayer. In such a case, the taxpayer must take deductions attributable to the activity in the following order and only to the extent stated in the following three categories:

Category 1 Deductions

Deductions the taxpayer can take for personal as well as for business activities are allowed in full. For individuals, all nonbusiness deductions, such as those for home mortgage interest, taxes, and casualty losses, fall into this category.

Category 2 Deductions

Deductions that do not result in an adjustment to the basis of property are allowed next, but only to the extent the taxpayer’s gross income from the activity is more than the de­ductions under the first category. Most business deductions, such as those for advertising, insurance premiums, interest, utilities, and wages, fall into this category.

Category 3 Deductions

Business deductions that decrease the basis of property are allowed last, but only to the extent the gross income from the activity exceeds the taxpayer’s deductions under the first two categories. Deductions for depreciation, amortization, and the part of a casualty loss an individual could not deduct in Category 1 belong in this category (Code Sec. 183(b); Reg. Sec. 1.183-1(b)).

 

For individual taxpayers, these deductions may be taken only if deductions are itemized. Individuals take the Category 1 deductions on the appropriate lines of Schedule A (Form 1040). Individuals take the Category 2 and 3 deductions as miscellane­ous deductions on Schedule A (Form 1040).

 

Read here to learn more about Business or Hobby? Active or Passive?.

 

*This is for information purposes only and is not a substitute for legal advice or recommendations.

Row crop enterprise budgets are updated annually by Extension personnel to reflect recommended management practices for production on a per acre basis. Projected costs are gathered from multiple industry sources and a higher than average projected yield are used to estimate the associated cost for that level of production. Producers should review these budgets and use the values that best reflect the cost on their operation.

Budgeting is an important part of profitable corn production. The reduced tillage corn budget is available as both as an Excel spreadsheets and a PDF file. For questions about accessibility or to request accommodations, contact Extension Communications and Marketing at 334-844-5696 or extcomm@aces.edu.

Download a printable copy of the Reduced Tillage Corn Enterprise Budget PDF.

Download a working Excel file with the Reduced Tillage Corn Enterprise Budget.

 

Other crop enterprise budgets are also available for download.

Row crop enterprise budgets are updated annually by Extension personnel to reflect recommended management practices for production on a per acre basis. Projected costs are gathered from multiple industry sources and a higher than average projected yield are used to estimate the associated cost for that level of production. Producers should review these budgets and use the values that best reflect the cost on their operation.

Budgeting is an important part of profitable corn production. The irrigated corn budget is available as both as an Excel spreadsheets and a PDF file. For questions about accessibility or to request accommodations, contact Extension Communications and Marketing at 334-844-5696 or extcomm@aces.edu.

Download a printable copy of the Irrigated Corn Enterprise Budget PDF.

Download a working Excel file with the Irrigated Corn Enterprise Budget.

 

Other crop enterprise budgets are also available for download.

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