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WC KS | I just trying to stay with original post why some Accountants are scared of the term 'Hedge Account" That is IRS audit and who the auditor could be and what they could do......................................... IF you have no fear, then it is easy to defend your position.
Third party link: http://www.agriview.com/articles/2009/08/28/crop_news/crop_connecti...
IRS Examines Hedging Loss
While rules for deducting hedging losses haven’t changed, farmers who hedge grain can expect to have their records closely scrutinized, warns Gary Hoff with the University of Illinois.
The Grain Farmer Audit Technique Guide devotes seven pages to examining hedging transactions. As the IRS is currently hiring an additional 1,700 auditors, farmers selected for audit should expect the Revenue Agent to have studied this guide.
If a hedging transaction results in a loss, the loss is entered on Form 1040 Schedule F and reduces both taxable income and self-employment income. However, if the loss is from a speculative transaction, the loss is a capital loss, entered on Form 1040 Schedule D and limited to the amount of any capital gains plus $3,000. Hence, a farmer with a $100,000 reclassified hedge loss could be limited to recovering the loss over the next 33 years.
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is it just my accountant that doesn't like the words "hedge account"?
