Indoor Farming Business: Setup & Classification Question

Forum|Forum|3 years ago
April 7, 2023
1 reply
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Hello,

I setup an indoor vertical farming business last year (2022) and am trying to find the correct classification in Turbo Tax to list expenses. The first year of the business (2022) was spent establishing operations and only had expenses, this second year (2023) I have now started generating revenue.

Question #1: Is this considered a "Farm" if I am not doing traditional field operations
Question #2: If yes, would all the expenses/income be listed under the "Farm Income and Expenses" section? If not, where would I enter the information.

Observation:
The Business Codes for the non-farm Business setups do not correctly identify my operation so I am at a loss for next steps.

Best answer by AliciaP1

According to the IRS:

You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as owner or tenant. A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. It also includes plantations, ranches, ranges, and orchards and groves. Since you are growing and cultivating food-producing plants to sell, you are in the business of farming.

You should enter all your Farming activities under the Farm Income and Expenses section of TurboTax Home and Business. Your expenses incurred to get started in 2022 should be correctly identified as Startup Costs and amortized according to the IRS guidelines. See Business Startup Costs for more information.