Be ware fellow breeders! Keep all your receipts the IRS is after us!

Kristen Wilkins said:
I think the point is the IRS classifying the business as a hobby Matt and Jessica put their life and lots and lots of love into a small business. They dedicate so much time to the chameleon and it's also part of their livelihood .

It's a small family owned business their children have a big involvement . Leave the small people alone and worry about he real corrupt corporations !!. It's really maddening I completely understand how they feel . We have been audited 3 times we are both just small businesses loving what we do trying to support our family's .
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Oh wow. My parents own a small business that I work for and we have never been audited.
 
Virgil1972 said:
Oh wow. My parents own a small business that I work for and we have never been audited.
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Yes so imagine someone classifying their business as a hobby . The time you all spend there putting effort/time into the business running it . I'm not sure what kind of business but if it's one with a clientele the effort that goes into making good relationships to help run that small business that's your family's livelihood .

Being audited is very restful with the best of book works . Never mind the hours of putting books together getting receipts ready worrying that you have everything . That time is taking away from the business . For what it's just a small business .
 
Decadancin said:
Step one...

File for an extension (my understanding is that most of the audits come from those who file on time.)

Step two...

Do not claim trips to Madagascar as part of your business expenses unless you are actually there on business :D!

Honestly though, good luck with the audit. Hope it goes smoothly.
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Haha! I only wish we could go to Madagascar!!! What a dream that is! Truthfully, we are too dedicated to our work to leave for any long length of time; regardless, of the reason.
 
Teal Beauty said:
Haha! I only wish we could go to Madagascar!!! What a dream that is! Truthfully, we are too dedicated to our work to leave for any long length of time; regardless, of the reason.
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Normally I would be saying how important it is to have a "Work/Life Balance" but when you get to spend your days with chameleons (and each other ;)) I guess I'll let it slide :D.
 
Kristen Wilkins said:
Yes so imagine someone classifying their business as a hobby . The time you all spend there putting effort/time into the business running it . I'm not sure what kind of business but if it's one with a clientele the effort that goes into making good relationships to help run that small business that's your family's livelihood .

Being audited is very restful with the best of book works . Never mind the hours of putting books together getting receipts ready worrying that you have everything . That time is taking away from the business . For what it's just a small business .
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They may classify it as a hobby because their are many people that do it as a hobby and call it a business to pay less taxes.
 
jannb said:
Most people that I've talk to over the years just consider it a hobby. I have worked for H&R Block for 30+ years and even told clients it's just a hobby.
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jannb said:
I'm sure you love your guys and from what you just said it sounds more like a hobby than a business. I think the big warehouse breeders have a business and not nearly the feeling for the animals. When my daughter breed Panthers on a regular basis she just uses a room in her house along with the screen porch and the yard but in my humble opinion and knowing how the IRS works from the many audits I've been to over the years, it was a hobby that she enjoyed doing.
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I'm not sure if I've interpreted this wrong but it rubbed me the wrong way.

http://www.dictionary.com/browse/business

http://www.dictionary.com/browse/hobby?s=t

It's wonderful you and your daughter breed and get all the excitement of seeing these wonderful creatures. For yourselves it is a fantastic hobby but from my observation Matt isn't a gardener claiming to be a farmer. He has a legitimate operation making a living doing what he loves. Isn't that the American dream?! I look at the risk and stress along with finances that come from a breeding business - that can be braver than someone who punches in and out everyday. Again I am not trying to stir the pot but I just found those statements a little belittling.
 
bluesox68 said:
I'm not sure if I've interpreted this wrong but it rubbed me the wrong way.

http://www.dictionary.com/browse/business

http://www.dictionary.com/browse/hobby?s=t

It's wonderful you and your daughter breed and get all the excitement of seeing these wonderful creatures. For yourselves it is a fantastic hobby but from my observation Matt isn't a gardener claiming to be a farmer. He has a legitimate operation making a living doing what he loves. Isn't that the American dream?! I look at the risk and stress along with finances that come from a breeding business - that can be braver than someone who punches in and out everyday. Again I am not trying to stir the pot but I just found those statements a little belittling.
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If he's making a living at it and supporting himself as mentioned in the link above then he shouldn't have a problem. My daughter was by no means supporting herself. She's a speech language pathologist. By the time she bought all the supplies and feeders she had a loss on her sale of chameleons. I have been to audits with dog breeders, racer car drivers, photographers and even a guy that used his car to deliver newspapers in the middle of the night for 365 days a year and all he had was how many miles he drove a night times 365 days a year and since he had little to no receipts they pulled all of his expenses off his return and made him pay tax on the full amount of income. It seemed so unfair. We fought it for years but the best we could ever do was get them to wave the penalty. He still had to pay the tax and interest. In my 33 years of experience, I've seen the IRS do whatever they want to do. They didn't even allow the newspaper guy to claim his business as a hobby. At least with a hobby you can deduct your expenses up to your amount of income. He paid taxes and interest on all of his income for three years. Yes, they went back on him for three years.

I also once had a lady with a chicken farm and IRS gave her 3 years out of 5 years to show a profit and then made her turn the farm into a hobby. Also the IRS sometimes do audits 2 years after the tax return is filed and I have had several clients with tons of Home Depot receipts and the receipts had faded to where they were no longer readable and the IRA did not allow their deductions. I now recommend to all my clients to copy their HD receipts and save the copy with the original receipts.
 
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jannb said:
If he's making a living at it and supporting himself as mentioned in the link above then he shouldn't have a problem. My daughter was by no means supporting herself. She's a speech language pathologist. By the time she bought all the supplies and feeders she had a loss on her sale of chameleons. I have been to audits with dog breeders, racer car drivers, photographers and even a guy that used his car to deliver newspapers in the middle of the night for 365 days a year and all he had was how many miles he drove a night times 365 days a year and since he had little to no receipts they pulled all of his expenses off his return and made him pay tax on the full amount of income. It seemed so unfair. We fought it for years but the best we could ever do was get them to wave the penalty. He still had to pay the tax and interest. In my 33 years of experience, I've seen the IRS do whatever they want to do. They didn't even allow the newspaper guy to claim his business as a hobby. At least with a hobby you can deduct your expenses up to your amount of income. He paid taxes and interest on all of his income for three years. Yes, they went back on him for three years.

I also once had a lady with a chicken farm and IRS gave her 3 years out of 5 years to show a profit and then made her turn the farm into a hobby. Also the IRS sometimes do audits 2 years after the tax return is filed and I have had several clients with tons of Home Depot receipts and the receipts had faded to where they were no longer readable and the IRA did not allow their deductions. I now recommend to all my clients to copy their HD receipts and save the copy with the original receipts.
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The IRS are like leeches :confused: !!. They want to suck everyone dry . We have had 3 audits we have been fine each time . They should leave the little people alone . That's my rant :rolleyes:
 
jannb said:
If he's making a living at it and supporting himself as mentioned in the link above then he shouldn't have a problem. My daughter was by no means supporting herself. She's a speech language pathologist. By the time she bought all the supplies and feeders she had a loss on her sale of chameleons. I have been to audits with dog breeders, racer car drivers, photographers and even a guy that used his car to deliver newspapers in the middle of the night for 365 days a year and all he had was how many miles he drove a night times 365 days a year and since he had little to no receipts they pulled all of his expenses off his return and made him pay tax on the full amount of income. It seemed so unfair. We fought it for years but the best we could ever do was get them to wave the penalty. He still had to pay the tax and interest. In my 33 years of experience, I've seen the IRS do whatever they want to do. They didn't even allow the newspaper guy to claim his business as a hobby. At least with a hobby you can deduct your expenses up to your amount of income. He paid taxes and interest on all of his income for three years. Yes, they went back on him for three years.

I also once had a lady with a chicken farm and IRS gave her 3 years out of 5 years to show a profit and then made her turn the farm into a hobby. Also the IRS sometimes do audits 2 years after the tax return is filed and I have had several clients with tons of Home Depot receipts and the receipts had faded to where they were no longer readable and the IRA did not allow their deductions. I now recommend to all my clients to copy their HD receipts and save the copy with the original receipts.
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I'm fully aware of the inconsistencies that can come from the financial and governing bodies. I'm sure we can all tell stories of corruption and also thankfulness from the irs and taxes. I've personally got approvals for professional Gamblers based solely on submitting consistent winning slips from casinos. They also wouldn't consider themselves card hobbyist lol. The point I was trying to make wasn't about the advantages vs disadvantages it was more about recognizing its not up to us to judge whether or not its a business for some and a hobby for others.
 
Fortunately, we have our taxes done professionally by a certified accountant and reputable company; therefore, we feel that we have very little to worry about. Had out accountant felt that we did not have a legitimate business, he would have advised accordingly. Our accountant has many, many years experience in tax matters including expertise in the field of tax audits. We have very good business records. At this point in time we find this matter to be more of an annoyance and rather insulting. It is a shame that small business owners must be questioned regarding their practice when they have so many responsibilities related to owning and operating their business.

Our announcement here has not been to request individual opinion on whether or not we are a true business; but merely to advise others to keep their books clean and retain documentation of their expenses and income. Based on reaction, I am assuming that many partake in the selling or perhaps the trading/exchanging of chameleons as a hobby and not as a business so for them this may never be an issue. Perhaps for some, a hobby is satisfying; but for us, a family business has always been our dream!

Thank you for your support and for standing with us through this challange! Many of you have become an extension of our "chamily" and we appreciate your kind words and encouragement. It is for the LOVE of and devotion to these amazing creatures that we are driven to success!
 
Virgil1972 said:
I don't see a problem as long as you were not deducting stuff that does not have to do with the business and have paid the taxes on stuff you have sold.
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Just playing devils advocate, I think you hit on a reason why the IRS wants to classify this as a hobby. To many people will claim things just to get a tax break. Since Chams come from far off countries, I could see someone stating a trip to those countries is a "business" expense and try and write off most or all of the trip. At what point do you claim a hobby is a business?

What's the threshold or criteria that says "hobby" or "business"?

If I get a second Cham can I claim all expenses for it on my taxes if I claim I am a new breeder or starting a business? Can I claim losses for all the money I put into it if the animal dies? Does this apply if I have 2 reptiles? What is I have 10?

I can see how this can be complicated and I can see why the IRS says it's a hobby. Yes, I know there are small businesses that are family run, but the uniqueness of this and that fact that it for all practical purposes looks like your raising pets in the eyes of the IRS. I guarantee that if you had a warehouse, a website, employees a distribution system in place there would be no questions. The IRS does not care that you love and take care of the animals in your care before selling them as opposed to just feed them and sell them like the breeders for the chain stores do. You can't attach abstract or non-concrete reasons to the argument to try ans support your position. Our government doesn't see it that way. Things are black or white, right or wrong. Not a whole lot of gray. The IRS assumes you are going to cheat them and makes you prove otherwise. Sometimes rightfully so, other times not so.

With all that being said, best of luck to you Matt Vanilla Gorilla. I was not aware that you are a relatively new American citizen, but congratulations. Although I was born from a military family and a US citizen, my mother was not. She also went thru this process when I was about 6 years old. I still remember it well, but because she was married to my father (they still are over 50 years later) I don't believe she had issues with staying here or paying nearly as much as you did. Our country is great, but little things like that can suck at times. :cool:
 
broderp said:
Just playing devils advocate, I think you hit on a reason why the IRS wants to classify this as a hobby. To many people will claim things just to get a tax break. Since Chams come from far off countries, I could see someone stating a trip to those countries is a "business" expense and try and write off most or all of the trip. At what point do you claim a hobby is a business?

What's the threshold or criteria that says "hobby" or "business"?

If I get a second Cham can I claim all expenses for it on my taxes if I claim I am a new breeder or starting a business? Can I claim losses for all the money I put into it if the animal dies? Does this apply if I have 2 reptiles? What is I have 10?

I can see how this can be complicated and I can see why the IRS says it's a hobby. Yes, I know there are small businesses that are family run, but the uniqueness of this and that fact that it for all practical purposes looks like your raising pets in the eyes of the IRS. I guarantee that if you had a warehouse, a website, employees a distribution system in place there would be no questions. The IRS does not care that you love and take care of the animals in your care before selling them as opposed to just feed them and sell them like the breeders for the chain stores do. You can't attach abstract or non-concrete reasons to the argument to try ans support your position. Our government doesn't see it that way. Things are black or white, right or wrong. Not a whole lot of gray. The IRS assumes you are going to cheat them and makes you prove otherwise. Sometimes rightfully so, other times not so.

With all that being said, best of luck to you Matt Vanilla Gorilla. I was not aware that you are a relatively new American citizen, but congratulations. Although I was born from a military family and a US citizen, my mother was not. She also went thru this process when I was about 6 years old. I still remember it well, but because she was married to my father (they still are over 50 years later) I don't believe she had issues with staying here or paying nearly as much as you did. Our country is great, but little things like that can suck at times. :cool:
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Its all the people that get one clutch of eggs and call it a business that make it more difficult for people like Matt that are really trying to start something.
 
When we talk about chameleon losses, I have not claimed any, not even when I lost a breeder pair of unique rare chameleons that cost me over $4000 plus shipping! When you buy nearly 20,000 crickets a month to feed all the hungry mouths despite for breeding a lot of your own bugs (4 kinds of cockroaches, two kinds of stick bugs, silk worms, horn worms, super worms, wax worms, blue bottle flies, two kinds of fruit flies, bean beetles etc....) then I am not talking about one or two clutches and calling it a buisiness. We have run the breeding as a hobby for a long time till it started getting big. It has been a while since anyone in their right mind would call a operation such as ours a hobby. We felt that it was important to call it a buisiness and operate it as such to avoid issues with the IRS and other legal boards. But it seems no good deed goes unpunished!
 
Matt Vanilla Gorilla said:
When we talk about chameleon losses, I have not claimed any, not even when I lost a breeder pair of unique rare chameleons that cost me over $4000 plus shipping! When you buy nearly 20,000 crickets a month to feed all the hungry mouths despite for breeding a lot of your own bugs (4 kinds of cockroaches, two kinds of stick bugs, silk worms, horn worms, super worms, wax worms, blue bottle flies, two kinds of fruit flies, bean beetles etc....) then I am not talking about one or two clutches and calling it a buisiness. We have run the breeding as a hobby for a long time till it started getting big. It has been a while since anyone in their right mind would call a operation such as ours a hobby. We felt that it was important to call it a buisiness and operate it as such to avoid issues with the IRS and other legal boards. But it seems no good deed goes unpunished!
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I'm pretty positive you are not going to Madagascar for vacations either . Not with the BUSINESS you have to run !!. OOP HOBBY :love:.
 
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