Maple Syrup Production Tax implications

[Wendy Scheening]

In 2015 we converted our maple syrup hobby into a small business.  This is the first year we have to file our taxes related to the business and are not certain if we should consider it farming or retail sales (schedule F or schedule C) or what the standard business code is that we should use.  We own our own woodlot (38 acres) and do not purchase any other sap at this time.  We contacted the NYS sales tax division and they said we do not need a sales tax number because we do not collect sales tax on our sales.  We are very small scale but hope to slowly expand.  Can anybody offer advice, or pointers on where to find the answers?  Please do not say a tax professional because I already work with them, and the ones I have asked do not really know which approach to use. They know all about preparing returns but not specifics on maple syrup production.  Thanks very much for any help.

[Stephen Childs]

Wendy, Generally it is to your advantage to be considered a farm for tax purposes.  The main reason is that with a schedule F using the cash method you do not have to account for either supplies or product inventory.  Doing such inventory can be a lot of work, how to value the inventory can be a problem and inventory will be considered part of your profit for tax purposes even when you have not received any real income from it yet.  If you wish to apply for ag value assessment on your sugarbush they want to see a proof of farm income.  Schedule F instructions are probably your best resource for working through the process.  I don't know of any maple specific instructions.  Setting up your chart of accounts to somewhat match the income and expense lines in the schedule F can also make the figuring taxes less frustrating.  thank you.  Steve

[Wendy Scheening]

Thanks Steve.  I will definitely look into doing it that way.  I appreciate your response.  Wendy

[Brett Davidson]

Wendy,

You may find it helpful to take a look at publication 225 Farmer's Tax Guide.  My guess is that your business fits the definition of farming.  Farmers get a lot of breaks that other business' do not get.  Here is a link to the pub - 

https://www.irs.gov/pub/irs-pdf/p225.pdf