Bought cow/calf pair in January - Tax Help

[gorillaboze]

I bought a cow/calf pair in January 2012 and sold the calf in December 2012. I have done my own taxes for years, but just got into the cow/calf business. I know if I raised the calf it would be all profit. But since I purchased it do I need to split the cost of the pair? If so, any help on that would be great!

Thanks
-Chad

 

[kenny thomas]

I can't explain how but you can either depreciate the costs of both over a few years or you can take a loss because you spent more than you sold. But you better get more opinions. I buy and sell a lot and the difference between bought and sold is what I file taxes on. Good or bad.

 

[AllForage]

You can only depreciate breeding stock. I would start using a CPA since you started farming. A lot cheaper than a audit from the IRS.

 

[tom4018]

You can only depreciate breeding stock. I would start using a CPA since you started farming. A lot cheaper than a audit from the IRS.

Someone that does farm taxes will usually save you money, plus the peace of mind.

 

[Chris H]

You can only depreciate breeding stock. I would start using a CPA since you started farming. A lot cheaper than a audit from the IRS.

Yep, on all that information. I keep all the records, drop off all the figures & papers at the accountant and go shopping for a couple hours. It's the best shopping day of the year because I'm not all stressed out about filling out those papers! I do keep up on IRS regs and review what the accountant did.

You will want to split the purchase price between the cow & calf. Assign the calf a fair market value and the rest gets assigned to the cow. The calf's purchase price is an expense for 2012. The cow's value will be depreciated over several years, ask your accountant. Depreciation schedules was the biggest reason I started using an accountant years ago.