Greetings, I'm trying to make decisions about running an LLC small business (small farm). It's tough to get going and may have losses for years due to equipment expenditures and investment in the land. I wouldn't want to get a Hobby Loss determination. If I had the ability to invest in futures/stock market profitably under the name of the LLC, would the Capital Gains and Operating Losses offset each other at all? If a business lost 50,000 in the operation side of the business but made 100,000 investing, would it be considered to be a profitable year for the business from the perspective of Hobby Loss regulations? Thank you
The way I read your scenario, and I am not a tax professional but I do operate a trading LLC, is that you have (at least) 2 flaming hoops of fire to move through. 1) A farming business has it's own specific set of qualifications and tax code. 2) Your trading/investing would need to be pertinent to the farming business. A difference clearly exists between a capital gain/loss on say DKNG stock versus a capital gain/loss on say milk or soybean futures as far as a farm business is concerned. Otherwise... Farming and trading are two separate businesses, each with unique qualifications and tax code complications. Seek professional advice.
For complex tax matters such as these, I would suggest you consult with a qualified tax professional. While, I do my own taxes and consider myself knowledgeable of most common tax problems, I will not even try to give my 2 cents because it might mislead you and end up costing you. You are better off paying for the time of a tax professional.