Nondeductible Expenses You cannot deduct personal expenses and certain other items on yourtax return even if they relate to your farm. Personal, Living,and Family Expenses You cannot deduct certain personal, living, and family expenses asbusiness expenses. These include rent and insurance premiums paid onproperty used as your home, life insurance premiums on yourself oryour family, the cost of maintaining cars, trucks, or horses forpersonal use, allowances to minor children, attorneys' fees and legalexpenses incurred in personal matters, and household expenses.Likewise, the cost of purchasing or raising produce or livestockconsumed by you or your family is not deductible. Other Nondeductible Items You cannot deduct the following items on your tax return. Loss of growing plants, produce, and crops.Losses of plants, produce, and crops raised for sale are generallynot deductible. However, you may have a deductible loss on plants witha preproductive period of more than 2 years. See chapter 13for moreinformation. Repayment of loans. Estate, inheritance, legacy, succession, and gift taxes. Loss of livestock.You cannot deduct as a loss the value of raised livestock that dieif you deducted the cost of raising them as an expense. Losses from sales or exchanges between related persons.You cannot deduct losses from sales or exchanges of propertybetween you and certain related persons, including your spouse,brother, sister, ancestor, or descendant. For more information, seechapter 2 of Publication 544,Sales and Other Dispositions ofAssets. Cost of raising unharvested crops.You cannot deduct the cost of raising unharvested crops sold withland owned more than one year if you sell both at the same time and tothe same person. Add these costs to the basis of the land to determinethe gain or loss on the sale. For more information, see Section1231 Gains and Losses in chapter 11. Cost of unharvested crops bought with land.Capitalize the purchase price of land, including the cost allocableto unharvested crops. You cannot deduct the cost of the crops at thetime of purchase. However, you can deduct this cost in figuring netprofit or loss in the tax year you sell the crops. Cost related to gifts.You cannot deduct costs related to your gifts of agriculturalproducts or property held for sale in the ordinary course of yourbusiness. For example, you cannot deduct as a farm business expense,in the year of the gift or any later year, the cost of raising cattlegiven as a gift to your child or the cost of planting and raisingunharvested wheat on parcels of land given as a gift to your children. Club dues and membership fees.Generally, you cannot deduct amounts you pay or incur formembership in any club organized for business, pleasure, recreation,or any other social purpose. This includes country clubs, athleticclubs, luncheon clubs, sporting clubs, airline clubs, and hotel clubs. Exception.The following organizations will not be treated as clubs organizedfor business, pleasure, recreation, or other social purposes, unlessone of its main purposes is to conduct entertainment activities formembers or their guests or to provide members or their guests withaccess to entertainment facilities. Boards of trade. Business leagues. Chambers of commerce. Civic or public service organizations. Professional associations. Trade associations. Fines and penalties.You cannot deduct fines and penalties, except penalties forexceeding marketing quotas, discussed earlier.