No Where To Go But Up

[manureman]

After losing my turkey operation to the weather,finding out the IRS is going to screw me like a big dog,having our freezer go out and losing our winters meat,all I could do was laugh at my contiueing run of bad luck last night.I managed to rent an old turkey house to move my youngest flock to for finishing,it's not been used for several years so nothing is turn key ready and it's been a battle to get it in operation.Last night after dark I was literally crawling through what is left of one of my barns to rob some parts.This should be on the TV show worlds dirtest jobs,when the snow & ice melted it all ran to the center and into the barns turning the litter to liquid manure in alot of places and there are lots of dead turkeys traped under stuff so the smell is really something,I had a light in one hand and a little tool box in the other up on one of the dry spots and was down on my stomach trying to get under a truss and to where I wanted to be when I found out the dry spot I was on was owned by a polecat and being a polecat he did what they do best and pissed all over me,I let him keep the feedline switch I was after.Me and the wife are still laughing about it,she said when she looked out the window and saw me in the light of the flashlight in nothing but my drawers and gum boots washing off with the hose in late december she figured I'd finally just lost it lol...I figure if I aint hit bottom it aint far off now..LOL... Jim

[Horsefly]

Jim,you would be on TV if you had gotten hurt while crawling around in turkey crap and polecat spray and needed to go to the emergency room.I feel sorry for your wife.I've been sprayed a few times,once by a civic cat,and I did all the tomato juice and grapefruit juice gimmicks and would think I had the smell off,but the first person I'd get near would hold their nose and start making distance from me.Funny how you get use to it.We grew up calling skunks polecats too,and civic cats were hydrophoby cats.Old folks thought all civic cats had rabies.Sure wish I was close enough to you to be helping you get things back and running,but you'd have to be on your own washing off Peppy La Pew pee.Jerry

[FC]

I'm still not convinced that your insurance is going to get taxed. This is for a business loss, and last I heard, you can claim business losses.

 

Are you SURE you don't want a collection, or have me sell some of my excess rifles for the cause? Heck, I have enough. Don't be too prideful.

[karlunity]

Jim I have to agree with FC on this.

 

First: get a better accountant.

 

Second: We have about 500 members so if most kicked in, say 10 to 20 bucks that would come to between 5 and10 grand. That is not going to kill us and I know you would do the same for us.

 

Think about it.

Karl

[swamp_thing]

Jim, I must say I agree with FC and Karl, it would not be a problem for those here to make a small contribution to your cause. While I certainly understand your feelings of not wanting to feel like you are asking for help I also want you to know that it is being offered. Friends help friends when in need because that is what it is all about. When you consider we here are more like family than friends then this is even more true. If you can see your way to take a bit of help from your MFRC family, just say the word and I am sure it will come to be. swamp_thing

[z1r]

Allright guys, here's what I propose: We all heard Jim's wonderful story of the large black trucks pulling up at his place and truck loads of menonites piling out to help. We'll, almost any one of us on the board would do the same if we were not geographically challenged. True, the internet brings us all closer but the reality is that great distances still seperate us. I can appreciate Jim's reluctance to accept contributions but let me put this spin on it; he would not reject our physical help. Well, in light of the vast distances that seperate us, let me suggest that Jim look upon contributions not as monetary gifts or handouts but rather as a substitute for our manual labor.

 

Jim we can send straight to you or maybe you can set up a paypal account and we can send it there?

 

I'll start off with $100. I've been real lucky lately and it's time I pass that forward.

[FC]

http://www.fema.gov/news/event.fema?id=7286

 

http://www.irs.gov/publications/p225/ch11.html

 

http://www.irs.gov/pub/irs-pdf/p547.pdf

 

http://taxes.about.com/od/taxplanning/a/freelance_5.htm

 

http://www.irs.gov/publications/p334/ch09.html

 

http://www.irs.gov/publications/p334/ch08.html#d0e7041

 

http://www.irs.gov/publications/p334/ch10.html#d0e7683

 

http://www.irs.gov/newsroom/article/0,,id=98936,00.html

 

http://www.irs.gov/pub/irs-pdf/p2194.pdf

 

http://www.irs.gov/businesses/small/articl...=147157,00.html

 

 

http://www.irs.gov/publications/p225/ch11.html

If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. See Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft.

Actual reimbursement same as expected. If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss.

Lump-sum reimbursement. If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Figure the gain or loss separately for each asset that has a separate basis.

Adjustments to basis. If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. The result is your adjusted basis in the property. Amounts you spend to restore your property after a casualty increase your adjusted basis. See Adjusted Basis in chapter 6 for more information.

 

Proof of Loss

To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. You must have records to support the amount you claim for the loss.

Casualty loss proof. For a casualty loss, your records should show all the following information.

• The type of casualty (car accident, fire, storm, etc.) and when it occurred.

• That the loss was a direct result of the casualty.

• That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage.

• Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.

A casualty or theft may result in a taxable gain. If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. You generally report your gain as income in the year you receive the reimbursement. However, depending on the type of property you receive, you may not have to report your gain. See Postponing Gain, later.

Your gain is figured as follows:

• The amount you receive, minus

• Your adjusted basis in the property at the time of the casualty or theft.

Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain.

Amount you receive. The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property.

Example.

A tornado severely damaged your barn. The adjusted basis of the barn was $25,000. Your insurance company reimbursed you $40,000 for the damaged barn. However, you had legal expenses of $2,000 to collect that insurance. Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain.

1) Insurance reimbursement $40,000

2) Legal expenses 2,000

3) Amount received

(line 1 - line 2) $38,000

4) Adjusted basis 25,000

5) Gain on casualty (line 3 - line 4) $13,000

Other Involuntary Conversions

In addition to casualties and thefts, other events cause involuntary conversions of property. Some of these are discussed in the following paragraphs.

Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. You report the gain or deduct the loss on your tax return for the year you realize it. However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. See Postponing Gain, later.

Standing crop destroyed by casualty. If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period.

 

Weather-related sales of livestock in an area eligible for federal assistance. For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years.

For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, available at www.irs.gov/irb/2006-39_IRB/ar01.html.

 

Reporting Gains and Losses

You will have to file one or more of the following forms to report your gains or losses from involuntary conversions.

Form 4684. Use this form to report your gains and losses from casualties and thefts.

Form 4797. Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income.

Schedule A (Form 1040). Use this form to deduct your losses from casualties and thefts of personal-use property that you reported on Form 4684.

Schedule D (Form 1040). Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Also, carry over the following gains to Schedule D.

• Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year.

• Net gain shown on Form 4684 from the casualty or theft of personal-use property.

Schedule F (Form 1040). Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 34, if you use the cash method of accounting and have not otherwise deducted these losses.

 

http://www.irs.gov/businesses/small/indust...d=99062,00.html

 

http://www.irs.gov/publications/p225/ix01.html

 

 

[donmarkey]

Jim, I must say I agree with FC and Karl, it would not be a problem for those here to make a small contribution to your cause. While I certainly understand your feelings of not wanting to feel like you are asking for help I also want you to know that it is being offered. Friends help friends when in need because that is what it is all about. When you consider we here are more like family than friends then this is even more true. If you can see your way to take a bit of help from your MFRC family, just say the word and I am sure it will come to be. swamp_thing

I'd match that! And remember I know where you live, Jim. So you might not get a say in the matter.

-Don

[z1r]

All settled then, Don will have to pass on the addy to me or I won't finish his bolt. Sorry Jim, but you can't expect Don to hold out when I'm blackmailing him. :-)

[manureman]

Guys I can't thank you enough for your offers,I wish I was word smith enough to tell you.But we are going to be alright.I've had time to think on this and kind of get over the initial shock and panic and now that my heads a little clearer I'm not as flipped out over it as I was.We took our insurance check up to Farm Credit yesterday and talked with them(their name was on the check too) we put it in an escrow type account and looked over everything and I'm not in as bad of shape as I thought.Cattle prices have been good the last few years and my row crops made better than expected this year.We're not in danger of losing the place ,I can sell off most of my cattle after the first of the year keeping 25 cow calf pairs and a bull which is about all this old ridge farm will run and between the insurance and cattle I can pay off the farm and not owe on the cattle I keep back and pay off most of my other debt,thats the good news and that puts me in really pretty good shape.Bad news is I won't have the bucks to build my barns back and I'll have to borrow against my place and cattle to pay the IRS,but it's a workable situation.I'm not sure what I'll be doing for a living 3 months from now,this rented turkey operation may or may not turn into something,alot of things are still up in the air.Bottom line is there are alot of folks out there that aint got it near as good as me.Thanks again all! Jim. P.S. FC I hope your right but I've talked with 3 different CPA's so far and they all tell about the same story,but I'm going to print off the info you posted and run it by them, thanks!

[Dr.Hess]

Hey Jim,

I'm sorry to hear of your circumstances and hope it all works out for you. What FC posted says, basically, (and I ain't a lawyer, I'm more an anti-lawyer) that if you have something, like a turkey house, say, that you built and then depreciated on your taxes, there will be a "tax basis" for that turkey house. For example (and I'm pulling these numbers out of the air): You spend 50K to build a turkey house. You depreciate that turkey house every year on your taxes, using various complicated formulae, and after 10 years, you have depreciated the cost of that turkey house down to 10K, say. You have the turkey house insured for 50K. An ice storm comes in and wipes it out and the insurance company gives you a check for 50K. Well, you really only have 10K in that turkey house, from a tax stand point, as you have declared the other 40K as depreciated operating expense, and it reduced your taxes from the turkeys or other income accordingly over the 10 years. The IRS says you have 10K in the turkey house from the IRS' standpoint, you got a check for 50K, you owe the taxes on the 40K. These are the taxes you saved over the years by depreciating your turkey houses. Now the feds want it back. This is the problem with depreciating income producing property. It is really only a tax deferment, not a tax savings when it comes to real property that will keep its value or go up. If it was a truck that you paid 20K for, drove to the ground, depreciated to 2K, wrecked and the insurance company gave you 1K for it, then you would not have a tax gain, but a tax loss. If they gave you 3K and it was depreciated to 2K, you owe taxes on 1K. The insurance company would never give you full original purchase price on an old truck, so that 20K would never be there on a truck, but on a rental house or a turkey coop, it is different than a truck as the value remains.

So, what you need to do is find out what your depreciated basis was on the turkey houses. Have you been depreciating them? How much was left?

Like the guys said, we can all chip in a few bucks and help you out there, fella. Just don't hate us vegetarians.

 

Dr.Hess

[manureman]

Doc,depreciated the barns out just last year,so there is the problem with this invoulantary conversion as they put it.Because they were fully depreciated the IRS views my total loss and 100% pay off by the insurance as a sale of the barns to the insurance.Even though I had them insured for all the in.co. would allow it would cost 3 times that to rebuild them at todays prices,kind of a catch 22.Or just plain stupid on my part for not knowing the tax code better I reckon.Doc I don't hate you vegetarians but I sure like to razz ya.Now wouldn't a big ole bloody steak and a beer be good right now? You know you want it Doc dont fight it . lol.. Jim

[Dr.Hess]

Well, then like you said, you basically sold the coops to the insurance company and owe tax on the gain (100% if your tax basis was zero). Pay the taxes and be glad you had the deductions over the years.

 

Really, I could care less about the big bloody steak. I have been a vegetarian now for about 18-19 years, I guess. I will buy you a beer or give you a Hessel Brau (my home brew) if you come down south.

 

Dr.Hess

 

[FC]

Was a disaster declared? Did you have additional equipment losses? Ag gets breaks.

 

Don, he's going to be a hard-head (which shows he isn't mooching). What's his address?

[odies dad]

First of all let me say right now I'm glad I'm not you. I had a close call run in with a skunk that was eating out of the dog dish I went outside in the dark to fill. I don't know who was more startled.

Second, if you use the insurance money to replace the destroyed buildings, wouldn't that put you back to zero with the Infernal Revenue Service?

Best wishes with your plight.

I'll be praying for you.

[manureman]

Tony the boys down at the court house are getting the figures together to try and get the feds to declare it a disaster,from an ag. standpoint it's not period,but the county I'm in has alot of miles of shoreline on the lake of the Ozarks.This is not a corps. lake so people own 100% of the shoreline,it brings big big bucks,and they all have big boats and docks and I mean big boats alot of them with twin 500HP cats in them costing in the millions.They are estamating that in one cove alone there was 145 million dollars worth of damage to boats and docks ,They think this may get us the federal disaster declaration but there is no way to know for sure.And PLEASE DON"T be sending money ,I'm really fine.I just got a check yesterday from Cargill for the big turkeys that the Mennonites all showed up to help with.They do this direct deposit and I was at the atm yesterday and saw they had made the deposit,I've not seen the settlement statement from them yet as this usually shows up a few days later but I was suprised at the amount,it seems they are being way more than fair with me as the birds actually had 5 more weeks to go before slaughter.I just started this thread because I thought getting sprayed might be worth a laugh to you guys,I'm sorry if I gave the impression that I was down and out,I'm far from it.Lets all just laugh and go on .Thanks Jim

[karlunity]

Cool.

Glad to read that all is well.

 

karl

[swamprat]

That polecat is cleaning up the dead birds, bet you end up with a pack of them around for awhile!

 

Swamprat

[fritz]

Jim,

I think you know me well enough by now that you don't think badly of me for not suggesting a solution to your situation. After all, only you know just exactly what happened.

 

But I gotta admit that encounter with the polecat was hilarious. I have had a few myself, but not when crawling through liquid turkey manure. And I remember how hard it is to get the smell off oneself. I still have the old single shot .22 that a skunk got me with. It stunk and stung so bad that I can't remember if I hit him or not. But I can still smell the skunk in the wood stock. 50 years later.

 

He hit me, and that's all I can remember.

 

I am wishing you all the best in the end of this disaster. And if the county ain't decalred it a disaster yet, they are being negligent. A disaster declaration will allow you to pay the tax out over a period of years.

Just like when we had to sell a whole herd of cows due to the drought. The sale price of the cows skewed income for that year, so some of it was deferred.

 

fritz