Breeder you got me thinking with this quote:

"So, would this put you under the hobby breeder category? You would have to check out with each state and you also have to pay state taxes and IRS taxes and probably have to change your income tax and claim your kennel as a business."

Now I realize this is probably a state to state thing, but I am new to lab breeding and I wonder about taxes for 2007. I could never afford to do this FT, I do have an income. But what can you write off if you are a hobby breeder? I track my food, vet bills, supplies, new dogs purchased for my program. Can you write off dog show costs? How many litters do you need to have to be a hobby versus a business. I had one litter last year and my accountant (who I am not sure knows much about this) says I need to reg as a LLC and claim everything. I was in the red last year and already know I will be this year as well. She also made a comment that I can only claim a loss for a couple years

I am horrible with this stuff so I was hoping that some people, especially those like I who do this for fun and only have 2-3 litters a year at MOST, would share

A business is supposed to be run with the intent to turn a profit. I guess in other words, you couldn't claim something is a business just to write off expenses year after year, at some point you have to show a profit. Best to check with a CPA. There can be income from a hobby too though.

The IRS rule is that you are to show a loss no more than 3 years out of 5. There are exceptions if the loss continues.

What I understand, you can't say something is a business just to have a tax write off to claim expenses, it has to be run like a legitimate business, proper records, etc. It has to be run with the intent to make a profit, doesn't mean you will of course, but sure would look suspicious if you continually claimed you bought goods at $5.99/each, and sold them for $2.99/each, then were claiming all your expenses like overhead to include vehicle mileage, insurance, utilities, office expenses, advertising, etc.

Maybe the first year you won't make a profit because of start-up costs, now that would look pretty legit though.

Your accountant is correct. Both on claiming losses and the LLC.

We have been doing this for years and we have boarding dogs and income from the litters and stud dogs, etc., we also are under agriculture in our state. We didn't always show a profit, last year we did. We claim shows, travel, kennel expenses, but we keep a very good record of this and we have an CPA who does our taxes. We started this when we set up the kennel, we are also grandfathered in our area for the kennel. There is allot too this but it has worked for us.

It also helps when you breed 10+ litters a year and have more than one breed with a total of over 40 dogs to make your "living" off of....

So, ok, not sure if this is right: if I only have a couple litters a year as my hobby, only have 5 or 6 dogs in the house, then I don't have to claim?? I would imagine it would be technically illegal if i didn't

If you're going to claim the new van as an expense, portions of your mortgage for your house since it houses your dogs, and such things I think you're getting into a whole other area.

But what is income from a hobby occasionally breeding a litter? Pretty easy to figure if you're not trying to claim such things as the above. Make a list of money in (money you received for the sale of puppies), then subtract money out (all related stud fees, litter vet expenses, food for dam and puppies, whelping supplies, your mileage reimbursement for using your personal vehicle to drive puppies for exams at vet, microchips, cleaning supplies, etc.). Anything in the black is profit, and that's what you need to claim as income, just my understanding though.

Wow, 40 dogs and breed 10 litters a year and have two breeds? I thought that maybe 50 dogs and at least 2 litters per month out of each breed?
Whatever it is, if you have 11 bitches you breed all the time and claim you are a Hobby Kennel and hide the fact you have more then you are supposed to have in litters, it will catch up with you! The IRS has ways to find these things out, it will take time, but watch out when they do. It is called extra income that isn't reported, and guess what, you don't have to caim only if you have a profit! Wrong, you make money, you claim.
That is what I think allot of this dog laws are, they are our elective people in our states that are trying to find more income for the state and were else is it, but from breeders that hide there extra income or just live off it thinking they will never get caught.
Oh well you are only fooling yourself, you would be smart and get a CPA to figure out what you owe to the state and the IRS for all the past years and for this year too.

Meticulous record keeping, hire a CPA, follow the state and local animal laws and take care not to piss off the animal control peeps. Then make sure you really really want to do this because it is NOT "easy money" by any means.

Yeah well there's more to worry about than the IRS too...how about the "breeder police"? You know...the ones that frown upon breeding dysplastic dogs and dogs that throw dysplastic dogs...?
It's really funny how word gets around so quickly...yes, this business is not for the faint of heart for sure...

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Replying to:

Wow, 40 dogs and breed 10 litters a year and have two breeds? I thought that maybe 50 dogs and at least 2 litters per month out of each breed?
Whatever it is, if you have 11 bitches you breed all the time and claim you are a Hobby Kennel and hide the fact you have more then you are supposed to have in litters, it will catch up with you! The IRS has ways to find these things out, it will take time, but watch out when they do. It is called extra income that isn't reported, and guess what, you don't have to caim only if you have a profit! Wrong, you make money, you claim.
That is what I think allot of this dog laws are, they are our elective people in our states that are trying to find more income for the state and were else is it, but from breeders that hide there extra income or just live off it thinking they will never get caught.
Oh well you are only fooling yourself, you would be smart and get a CPA to figure out what you owe to the state and the IRS for all the past years and for this year too.

There is no money in this IMHO, at least for us. Id just love to break EVEN for a year

This is not a very informed discussion. IRS and a state are two separate issues to deal with. Under hobby loss rules, you are "expected" to make a profit 3 years out of 5. If you don't, you are supposed to run your operation like a business and it should appear to any reasonable person (e.g., IRS auditor) that you were at least trying to do so. If the IRS concludes that you are a hobby breeder (as opposed to one in it for profit) you can still deduct your expenses, but only to the extent of your income. So, if you sold two litters, for a total of say $8000, and you spent $15000 on this "hobby" travelling around to shows, buying dogs, breeding dogs, paying vets, etc., then you are out of luck to the tune of $7000. In this example, the IRS has achieved what the tax law says it should. Your expenses cannot result in a loss, thereby reducing your taxable income, and consequently your income tax bill. A scam is a scam by any name, and these guys may piss us all off, but they are anything but stupid.

Thank you, you are right!!!

I don't think this is about Breeder Police? I don't think you have been in the Hobby Breeder Business long enough to be the Breeder Police? If you have a dispute with me then email me private, you seem to know who I am???

Breeding dysplastic dogs is a no-no and I have never done that or do I wish too and as far as my dogs throwing dysplasia, who's don't??? But, that isn't the topic here, so if you want, start a new thread about me

How would you know how long I have been in the "hobby breeder business" anyway? You don't.

Who ever said I was talking about you anyway????

Funny how people are so sensitive about certain topics!


All I pointed out was that there are more things to worry about than the IRS and I was trying to let the OP know that word gets around (as you pointed out with the your IRS example) amongst the other breeders in this game very quickly! Thats all. Take it as you will.

And no, I am certainly NOT the breeder police as some others *think* they are!!! Spending their life surfing others web pages...sad.

Oh and I have no desire to email you privately...

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Replying to:

I don't think this is about Breeder Police? I don't think you have been in the Hobby Breeder Business long enough to be the Breeder Police? If you have a dispute with me then email me private, you seem to know who I am???

Breeding dysplastic dogs is a no-no and I have never done that or do I wish too and as far as my dogs throwing dysplasia, who's don't??? But, that isn't the topic here, so if you want, start a new thread about me

I have no idea and don't think you know either
Not sensitive, just careful and wonder who wanted to change the topic we were on? Are you on the right forum?? You mentioned breeder police, nobody else, how did spending there life on surfing others web pages, how did we get on that You need to go back to the other forum, your on the wrong one.
This sounds like a personal thing! Don't email me, you will just go into my junk bin

acountant (or anyone else), what do those people do that never make a profit... ever?

My understanding (through 3 separate business ownerships) is that one must have *income*, not necessarily profit. Of course, I'm no accountant but no one has ever come after me either.

Showing and breeding dogs falls under the Show Horse Catagory. You can loose money for 5 out of 7 years. At least that is what my acct told me. I have only had one litter and claimed every penny spent and made. I spent the extra money to hire a corporate accountant who really knows the laws and keeps the irs book right on his desk for reference.

Since no one puts there real name.
Not sure about just having a breeding business. I have a Training kennel where I have to show a loss 3 out 5 yrs. Which I certainly have shown alot of profit yearly mainly through the training.

which I'm able to tie my showing dogs and litters in with the kennel.And it works out really well. I can write off anything that pertains to the dogs.Which most I do.But I don't go over board.

Hmmm, other forum?

As someone mentioned above if you do decide to go the business route you might then run afoul of the zoning laws in your area. This was one of the provisions in the California AB 1634 - in order to retain permits to keep intact dogs - you would have to BE a business. So much for the dedicated hobby breeder...

Below is a ruling just handed down in a specific case where people had continuing losses in their horse business. Basically, if you are legitimately conducting business, losses are allowed beyond the 5 year limitation.

Although the taxpayers, who were law enforcement officers, incurred consistent losses in their horse training and breeding operation, they conducted the activity in a manner that indicated it was engaged in for profit. The taxpayers had prior experience in training horses, consulted with experts, devoted considerable time to the operation both early in the morning and late at night, regularly consulted with their accountant and maintained appropriate books and records. The taxpayers did not ride the horses for pleasure. The losses they incurred were attributable to setbacks beyond their control including physical injuries to themselves that interfered with their ability to train the horses and illnesses suffered by two of their studs. The businesslike manner in which they conducted the activity demonstrated their actual and honest intent to make a profit. Back reference: 2007FED ¶12,177.40.

Ok, I'm kinda cunfused so please go easy on me.

Would we have to do anything if we only have 1 litter a year/possibly every other year(6 to 10 puppies a year/every other year) ? Lord knows we won't even break even with all the costs for showing, health tests, vet exams, stud fees , travel, etc.

Could someone explain what one would do, to avoid complications with the IRS , in our situation ? Would we have to claim our itty bitty "hobby" has an income ?

In my opinion (and I'm not a tax expert) if you only breed a litter once every other year you are exactly the kind of "hobby" kennel that the IRS would be looking to come after. What the previous poster said about being able to sustain losses beyond the 3/5 year guidelines (actually 5 out of 7 for horse breeding operations) is true. But the later post, including the quote from the tax case pretty well sums up what they are looking for. In the case of showing dogs, unless you are breeding litters or selling dogs at an appreciated value once their championships are completed, clearances obtained, etc., how could you possibly expect to demonstrate an intent to make a profit?

If you sell something for money, the IRS wants you to report it. You can also claim your expenses but when selling something, the IRS wants to know. Its also the law to charge sales tax on puppy sales unless your selling out of state.

This is great info, thanks.

Another point: "In the case of showing dogs, unless you are breeding litters or selling dogs at an appreciated value once their championships are completed, clearances obtained, etc., how could you possibly expect to demonstrate an intent to make a profit?"

Now, couldnt showing your dog be considered a way to advertise your stud dogs or bitch for your breeding program??

Who cares HOW many bitches one has if they are of good quality, have clearances and are not bred too many times? If they are treated right, have good socialization, most are shown and all are worked with in some way, not just stuffed in a kennel or basement, I see no problem! Whatever one can handle, but one must KNOW their LIMITS!!
Besides, I highly doubt all 11 have even ever been bred!
Know what you're talking about b4 you open your mouth, really!

I know who you are and I don't have dogs stuffed in the basement and it seems to me that this is getting into a legal thing. I think there are about 5 of us that your ripped off and I never had the sheriffs at my place??? Also, never listed on the NJ Lemon Law page for "Non Compliance", your taken off now, but you were on there a good year! So, you can spread all the rumurs about me, but your the sick one, not me!

Um, I'm not the one who STOLE a puppy - remember that???? You kept one out of a co owned litter with me and LIED about it??? Said you didn't keep anything until I asked you where was the rest of my $$$$
You want the sheriffs at your place?!!
And when did you move the dog crates outta your dark, wet basement??

Get over yourself and forget you ever knew my name weirdo!
Stop stalking me!
Sicko...

Can you guys take this somewhere else.... you are ruining my thread and all the info I tried to get to HELP ME is goign to get deleted

Never stole anything you were aware of what was there and you declined. Anyway ask your Mentor, she didn't want your name on the dog! That was a total "NO", that is why we called the puppy CASBAR'S VH GOT THE LAST LAUGH!! You have no idea who your friends are, heck you can't trust yourself and most of your friendships last only 6months. You need to sell all my pedigree's in your kennel! go steal someone elses!
I tried to get you off this post, you need to go back on your meds and leave this thread alone!

Well thanks ALOT breeder for totally ruining my thread and the info I need. You managed to break all of Jill's rules, named a state, named a kennel (a DUH) and now this will be deleted. Why dont you just get over whatever is going on and MOVE ON and be quiet You are ruinign things for other people with YOUR selfishness

I apligize to all, I just went on her innocently and this other breeder who knows how to push my buttons just had to start up! I hope everyone ignores my ignorance and my trying to get this person off the post. I did email Jill this morning, but it started up again. This is too good a post to start things up and please keep it going. Regardless of what us childish people got into, don't delete the post.
I also want to apoligize to the kennel name I mentioned, the name has nothing to do with the problem that is going on between this breeder and I.
From now on I will post who I am and if this other breeder cares to bash me, I will ignore it and she can look like the total idiot!

wow.....can't believe you are still going about this "A-nother Breeder". You need to get over this and move on with life. get over it. This forum is s'possed to be for advice and helping others!! stop turning everything into a fight like you like to do. No one is stalking you. It's nice how you go accusing people of things like HD, ED, and TVD. Keep personal issues personal instead of making it a public scene here. We'll all forget we knew your name if that is what you wish! TTYL!!!!