Brett,
        As long as you are trying to make money on the activity, you can
claim your expenses on either schedule F (Farm income and loss) or schedule
C (Business income and loss).
        Somebody wrote that you have to make money 3 out of 5 years to be a
business not a hobby.  This is an IRS guide line and not part of U.S. Law.
You can get Publication 334 from the IRS site:
http://www.irs.ustreas.gov/plain/cover.html.  The file is in pdf format so
if you don't have pdf reader you will need to down load the file.  Lots of
businesses have lost money for 20 years or more.  (Farmers routinely go in
the hole every year, this is offset by the gain in equity on the assets so
the farmer stays liquid, but still they don't show a taxable profit for years.)
 
        Other considerations:
 1)     If you are in "business" you will also need a sales tax number from
you state.  This will allow you to buy supplies with out having to pay sales
tax on the supplies.  You will have to collect sales tax on your retail
sales and give this money to the state. ( in most cases).
2)      You don't have to have employees to have an EIN.  This number is
obtained by filling out a form called SS-4 and filing with the IRS.  In
effect, the EIN is just an alias to have with the IRS for your business.
You will still be responsible for taxes, but for banking you can use this
number instead of your own social security number for setting up accounts
and you can also use the EIN when dealing with the state on sales taxes.
The EIN does not mean you are a corporation or that you will have employees,
it just gives your business a different identifying number to the government
so the bookkeeping is easier if you get questioned about taxes.
 
 
Good Luck,
Richard L. Barnes CPA
 
At 05:28 PM 9/9/97 -0600, you wrote:
>At what point does all the dollars that I spend having so much fun
>raising honey bees turn into a potential deduction on a Business Form for
>my yearly taxes.  Heaven forbid that this be a newbee question!
>
>Brett D. Bannon
>Folsom, NM  USA
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