LLC Client (Form 1065 Filer), is in the business of horse racing and breeding. What schedule is used to report the business activity? Is Schedule F, Profit or Loss From Farming used or the general Form 1065?
Horse breeding activities are generally reported onSchedule F(Profit or Loss From Farming), while horse racing activities are typically reported onSchedule C (Profit or Loss From Business).
That is for 1040s but for 1065's it can still be allocated F and face of 1065
The distinction is based on the nature of the activity:
Schedule Fis used for farming activities, which the IRS considers horse breeding, raising, and selling to be.
Schedule Cis used for general business activities, such as those related to racing operations with trainers, jockeys, and associated fees. Winnings from horse racing may also be reported on Schedule C if it is a business activity, or on Form 1040 (Schedule 1) if considered gambling winnings.
If you are involved in both breeding and racing, it is important to keep detailed records and allocate income and expenses appropriately for each activity to ensure correct tax reporting.
a 1065 is used for a partnership, ( at least two partners) if a single member LLC then you would use 1040 schedule F for breeding, and income and expenses for breeding. Use a schedule C for the racing side.
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