Income Tax Help
I have a farm that I have cash rented for the past two years. Last fall I purchased 10 additional acres that join my farm which will be added to the other ground as cash rented also. I spent several thousand dollars clearing this land to get it ready for row crops. My question is can i deduct any of this since I am on a cash rent?
Re: Income Tax Help
In this case you are buying land and improving it to make it suitable for farming. You intend to rent it out for cash rent and want to deduct the cost of improving it. I don't think the tax code permits that but will allow you to add the cost to your basis of the acres purchased in event of a future sale.
However, should you elect to farm the acres yourself the cost of improving the acres would be a deductale item. You can accomplish that by hiring someone to til the acres and raise a crop for you.
I recommend you consult with someone that is more familiar with the tax code.