Farming for Fun or Profit? A Review of the Provisions of Section 183 of the Internal Revenue Code

Authors

• J.W. Looney, University of Arkansas School of Law

Keywords

Internal Revenue Code § 183, Hobby loss rules, Agricultural taxation, Profit motive, Farm tax planning

Abstract

This article reviews the application of Internal Revenue Code § 183, which limits the deductibility of losses from activities not engaged in for profit. Focusing on agricultural operations, the author explains the statutory factors used to distinguish bona fide farming businesses from hobby activities. The article provides practical guidance for structuring and documenting farming operations to satisfy profit-motive requirements. It concludes that careful planning can enable part-time or small-scale farmers to withstand IRS scrutiny under § 183.

Recommended Citation

J.W. Looney , Farming for Fun or Profit? A Review of the Provisions of Section 183 of the Internal Revenue Code, 1983 Ark. L. Notes