Tax ?? Do you depreciate your goats?

Discussion in 'Business Buzz' started by Sunny Daze, Feb 1, 2011.

  1. Sunny Daze

    Sunny Daze New Member

    May 18, 2010
    Fairplay, MD
    We have been doing our own taxes up until this year (we are FINALLY throwing in the towel and found an accountant) but we are trying to get as much together as possible before our appointment next week. It seems you might have to depreciate your breeding stock, as opposed to a one time write off? Does anyone do this or know more about it? In the past I have always written off the purchase cost the year I bought them, but wondering if I have been doing it wrong?
  2. Desert Viking Ranch

    Desert Viking Ranch New Member

    Jan 17, 2011
    According to the IRS, livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis.

    When depreciation begins:

    Depreciation for livestock begins when the livestock reaches the age of maturity (not necessarily date of sale). If you acquire immature livestock for draft, dairy, or breeding purposes, your depreciation begins when the livestock reach the age when they can be worked, milked, or bred. When this occurs, your basis for depreciation is your initial cost for the immature livestock.

    When depreciation ends:

    You stop depreciating property (livestock) when you have fully recovered your cost or other basis. This happens when your allowed or allowable depreciation deductions equal your cost or investment in the property (livestock).

    If you are going to use an attorney then it is best to let them figure out the numbers, the formulas are very complex. I use TurboTax to file my Schedule F and it does the math for me and keeps records of each years taxes so that eventually my depreciation is 0. To be honest depreciation will only last for 1 years filing most likely unless you made a VERY expensive purchase and the "goats services" are taking years to pay it off. :thumb:

    You can take a one time write off OR use depreciation, but you cannot do both.

  3. Bellafire Farm

    Bellafire Farm New Member

    Jan 5, 2010
    NW Oregon
    @ Desert Viking... So if you buy a doe (or buck I guess too) for say, $1000, and they have...say 2 kids (selling for $500 each) then you've already made your initial investment back, correct?
  4. Desert Viking Ranch

    Desert Viking Ranch New Member

    Jan 17, 2011
    Yes that is correct...I sure wish I could do it that easy :slapfloor: but seriously, yea that's how the tax code is written. There are always little deductions and things you can tweak like was the total price just the price of the goat....or did you factor in mileage to get the goat for example.