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Tax Guide for Farmers – Depletion

The Tax Code provides a special section applicable to farmers or those conducting a farming business. One part of that section pertains to the use of depletion.

Following is an overview of depletion.

What is Depletion?

Depletion is the use of natural resources through the activities of cutting, drilling, mining, or quarrying. Through the use of depletion, the owner of the natural resource can determine the amount of the resource’s value that has been used and the amount that remains.

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Tax Guide for Farmers – Soil and Water Conservation Expenses, Part 2

The Internal Revenue Code is made up of the laws that guide preparation and filing of federal income taxes. The Code includes sections on a wide variety of topics, some of which pertain to the business of farming and the related income and expenses.

The section of the Code includes laws for how to report expenses related to soil and water conservation. This is the second in a series of articles focused on soil and water conservation expenses. The previous articles is available here.

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Tax Guide for Farmers – Deductible Expenses, Part 3

For those who own a farm or are otherwise in the farming business, they need to know there are specific requirements in the Internal Revenue Code that govern the unique types of income and expense only associated with farming. Those unique expenses include hired labor.

This article is the third in a series on the various deductible business expenses associated with farming. The previous articles on deductible expenses covered Prepaid Farm Supplies and Prepaid Livestock Feed. Continue reading

What do I do about the notice I received from the IRS?

If you receive a letter from the Internal Revenue Service (IRS), it could be for one of a variety of reasons.  Remember that it may not necessarily be a bad thing—it could just be an informational letter—so you need to start by taking a few minutes to read the letter carefully to understand the purpose.

At one time, receiving a letter from the IRS could be a confusing prospect, as it contained technical terms that might be difficult for many to understand.  However, the IRS has taken steps to redesign its letters so they are easier to understand.  Each letter should clearly state the reason you have received the letter and what steps you must take to address the issue.

In addition, the IRS has created a reference number you can use to find additional information about the reason you received the letter.  This reference number will be in the top right corner of the letter.  You can look up additional information about this reference number on the IRS’ web site at,,id=96199,00.html.

Following are a few of the common reasons why the IRS sends notification letters to taxpayers:

  • Reminder – The IRS has sent you a previous letter asking you to take action on a situation.  This letter serves as a reminder that you have not completed the necessary steps.
  • Overpayment – Because of an error found on your return, you have overpaid your taxes and are due a refund of the overpaid amount.
  • Balance Due – As the result of changes to your return because of a miscalculation, an amendment, an audit, or for other reasons, you now have an outstanding tax liability.  You will need to pay the balance due or contact the IRS to work out payment plan options.
  • Notice of Default – You have previously entered into some form of payment plan with the IRS to pay your tax liability, but you have failed to meet the terms as agreed to with the IRS.

If you agree with the notice and it does not specifically indicate you must take action to address an open issue, you do not have to respond or take any further steps.  However, if the letter indicates you should take action, regardless of the reason you received the letter, you should not ignore it.  Ignoring a letter from the IRS that requests action can make a bad situation much worse.  If you are unsure if you need to take action based on the letter or are unsure what the IRS is asking of you, you should seek professional help to be sure the appropriate steps are taken.

How can I obtain help with the notice I received from the IRS?

Professional help in reviewing your tax situation or a letter received from the IRS is close at hand.  If you complete the short form below, a tax attorney can review your situation and evaluate what action you need to take as a result of the letter.  This review is 100% confidential and free of charge.  Therefore, there is no reason to try to handle the situation with this free consultation from a tax professional.  Please complete the form today.