bobm
Garden Master
My wife audited a lady's tax returns a few months ago that had huge losses due to huge expenses for her family dairy the past 5 years. This older lady was also audited 3 and 2 years ago for huge losses. She was advised by the previous auditors that to be considered a business she has to make a profit in 2 out of 3 years or be classified as a hobby therefore any expenses would not be deductible. Her family dairy owns over 650 mature dairy cows and employs 4 farm hands. During the last audit , my wife counciled this lady as well as her tax preparer who was also present to consult a CPA that was specializing in farming to see where she could cut expenses so that she could continue as a business before her tax status is changed or risk the loss of her dairy farm to foreclosure for nonpayment of bank loans to cover her huge operating expenses. It seems this lady was a bleeding heart crazy cat lady type that didn't have the heart to cull the older cows that could no longer produce a calf so could not produce any milk as well as the very poor milkers which totaled at 122 cows . She had to buy feed and labor for these cows that were not producing any or negligeable income versus cost. As of today, due to advice of the CPA, her bank loan was restructured and additional funds added to the loan, 105 of the cows have gone to auction and another 50 will be going to auction next week. One of the farm hands was let go. A bovine nutritionist was consulted so that the rest of the cows could increase milk production. A veterinarian was hired to consult on which bulls were to be used for AI to improve on the future cow herd milk production. Armed with this information , my wife was able to continue this lady's dairy as a business at least for another year then have another review of progress toward profitability. I hope that she makes it ! 
