@bschroeder The IRS "stipulates that you can typically claim three consecutive years of farm losses" is a guidance. You need to take a look at all of the relevant facts and circumstances of your client's farming enterprise to determine if you have a business or a hobby.
Since you apparently have previously filed 2016, 2017, and 2018 returns with losses from your client's farming enterprise, what rationale suddenly warrants that for 2019 that the farm is now a hobby and that it is no longer a business?
Is the farm a real for-profit farming enterprise? Or is this just your client's hobby horses?
If this is a legit for-profit farming enterprise you deduct the losses each year as they occur.
I believe the facts of the situation point to the conclusion that his is not a hobby, but a legitimate money making venture. Things have just not worked out that way for a number of years. This is the first year I am personally preparing the return, thus the review of the circumstances on my part. I just wanted to make sure I was handling this properly given the fact that the losses have now occurred in the last 5 years which is beyond the normal scope of guidance provided by the IRS. I appreciate your thoughts on this.
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