Legal Question in Tax Law in California

Structuring farming business at our residential property

My wife and I live in the farmhouse on about 15 acres of unused former pasture land we bought a couple of years ago. We've experimented with some fruit and nut tree plantings with enough success to want to proceed with commercial-scale plantings. We also would like to set up and run this moderately risky venture as an LLC.

What is the best way to structure an agricultural LLC to take best advantage of Federal and California tax laws?

We can't subdivide our land to put the house and the farm on separate parcels. Should we give the LLC a long-term lease or an easement? Or should we just slide the whole property into the LLC? We want to get any reasonably-available tax benefits without risking loss of our home.

We have an existing mortgage. We don't expect to incur any additional debt. We would prefer not to refinance but this isn't out of the question. Any thoughts?

Asked on 1/08/04, 6:07 pm

1 Answer from Attorneys

Ken Koenen Koenen & Tokunaga, P.C.

Re: Structuring farming business at our residential property

My first thought is that you should set up an appointment with a very good CPA or a tax attorney to look at the overall picture. Advice based upon this little shell of information would not be prudent.

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Answered on 1/08/04, 6:20 pm

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