Hi! I'm filling out a Schedule F for the first time, and I've run into some confusion right at the beginning that I'm hoping someone here can help me with.
My principal product is chickens. I buy day-old broiler chicks, raise them for 7-8 weeks, have them slaughtered and packaged at a state-inspected processor, then bring them back home to keep in the freezer. I then take these frozen chickens to farmers markets where I sell them directly to consumers. Here's my problem:
Part 1, question 1 says "Sales of livestock and other items you bought for resale."
Easy. I don't sell livestock. I sell dead, packaged meat.
Part 1, question 2: "Cost or other basis of livestock and other items reported on line 1"
Okay...I didn't list anything on line 1, so I guess this doesn't apply. Same deal with line 3 where you subtract line 2 from line 1.
Line 4 is "Sales of livestock, produce, grains, and other products you raised"
Well, that's a relief, since I didn't bother to keep separate records at the farmers markets. I sell chicken, vegetables, eggs, fruits, and baked goods. I record my total sales at each market, and I record my expenses month by month, but I don't know what amount is chicken sales and what amount is everything else. Good thing I can just list it all together here on line 4, eh?
But then looking down in Part 2 ("Expenses"), I'm not seeing any line to enter the cost of my chicks. Chicks and feed are my biggest expenses. The only place I can see to enter the cost of my chicks is in line 2...except that that's only for animals you enter on line 1, and I can't enter them on line 1 because I don't re-sell them.
And then I get to thinking that maybe the part I'm missing is the "you raised" part in line 4. I didn't breed these chicks. They weren't produced by poultry I raised. Maybe that's what line 4 is after--stuff you made out of nothing other than what's listed under "Expenses". That would suggest I do list them under line 2...except that I didn't sell any livestock! That works fine for folks who sell their animals to a packer at the farm gate, but I retain possession of my livestock until it's no longer live.
So if there's no line for entering the cost of the chicks, and I'm supposed to list the meat sales on line 4 (and I realize I may well be wrong about both of those assumptions), is it possible I'm not allowed to list the cost of the chicks as an expense? That doesn't seem right.