The IRS Stipulates that you can typically claim three consecutive years of farm losses.  The IRS considers a farm to be a non-deductible hobby if it doesn't produce a profit for three out of five years.  My client is clearly trying to earn a profit, but has not ben able to in the last 5 years.  As a result, I'm thinking the loss would not be allowed.  Is that not correct? 

If the loss isn't allowed this year becasue there have been losses in the last five years, it could not get carried back so it would need to be carried forward.