Cattle as a tax break. ?'s

[backhoeboogie]

Just have a couple quick questions concerning taxes.

I've got a little bit of land that I can run about 20 head on comfortably. My question is, if I get started this year with say 5-10 head, is it still possible to get a tax break?

Is there an over under on head count that must be met before I start claiming all my expenses on my returns?

I dont have a thousand acres so I'm not really into this to try and turn a profit. I've read enough on here to realize that that is not what is to be expected.

While I'm on that subject though, how many do most of you run before you begin to start to turn a profit? I figure my best benefit financially from running cattle would be the taxes based on the amount of land I have to play with.

Wrong reason to raise cattle. Just remember there is no parole in the Federal pen.

Yep. Get each of those cows a SSN and claim them as dependants. :lol: :lol: :lol:

Seriously, if you only make $3,000 profit on a herd of cattle, you're going to pay taxes on that $3K if it is added to your normal income. Some people want to spend $30,000 on cattle to save $10K in income taxes.

The only break I see, if the savings in property taxes.

 

[cmjust0]

It's not just property taxes, though.. I've claimed most of my equipment and supply expenses, too.. Fencing, tractors, bushhog, etc.. The thing is, it's mostly all stuff you need anyway if you're going to keep up your land, so why not add cattle (or something else that turns grass into money) to the mix and try to recoup some of those costs? And since the plan then becomes to try and make a little money with the cattle, it only makes sense to deduct all the stuff it takes to do that..

I think what IRS is gunning for are people who make really good livings and should be paying really big taxes in their 9-5, but who instead sink a bunch of their income into a farm solely as a tax shelter with no intent to ever have it make money -- or even get close..

After all, even if they determine that you're a hobby farmer, you can still deduct enough to break even on your hobby -- just no more than that. If you make $5,000 that year, you can deduct up to $5,000 that year... If you don't make a dime that year, you don't deduct a dime that year.. All that does is eliminate the tax shelter..

 

[Brute 23]

If you need tools and stuff for the "Ranch" that you would probably buy any ways to have in you garage you can save some there.

IF you keep good books you can see when you get close to the end of the year what you might profit. If it is $3000 go spend $2500 on some thing you need. Maybe get an atv or some thing if you enjoy that kind of stuff.

I don't know that you can really keep cash in your pocket but you can have products to show for the money that would have gone to Uncle Sam.

 

[Susie David]

Been my thought that a operation needs to show income and growth even if it is running in the negatative and taking a big deduction. Just about everything that runs your farm is deductable from your power to your phone bill, every nut bolt and pencil can be written off.
Got to keep excellent records and have a receipt for every line item.
We bought a motor home this year...to travel to sales and events and such...we'll see how our accountant handles this one.
Just my two bits worth....DMc

 

[backhoeboogie]

Shucks. I've always wanted a 300 Weatherby Magnum. Don't need it. Just want one. Maybe I can buy one for "the feral hogs" :lol: :lol: (just not in my ethics to do such things)

 

[cmjust0]

I remember reading about a court case once where some folks were suing the IRS for the right to claim dog food as a business expense... Yep, dog food.

Might sound a little rediculous at first blush, but it turned out that the folks owned a junkyard.. Wanna guess who the dog food was for?

They won their case.

 

[backhoeboogie]

This is one my favorite type of questions.

Most people looking for a tax write off will normally spend more money that they saved by just paying the tax in the first place.

There are so many people out there who think you can just buy that 40,000 tractor and write it off, well you still spent the 40K and you won't ever get that kind of tax savings with 20 head or 100 for that matter.

Try putting the money in a 401K or IRA and lease out the land, it will make you more money that way.

JMO

Good post. But a 401K isn't nearly as much fun. Watching those babies learn to buck and run, a heifer grow into a cow is why most of us do it.

I agree Frankie, that is exactly why I do it.

I had a guy at work tell me this morning I HAD ALL THE MONEY because I own a few cows, he doesn't have a clue about what someone actually makes from this business.

Why not put the max you legally can into a 401K, AND watch the calves play as well? Best of both worlds.

 

[Brute 23]

I remember reading about a court case once where some folks were suing the IRS for the right to claim dog food as a business expense... Yep, dog food.

Might sound a little rediculous at first blush, but it turned out that the folks owned a junkyard.. Wanna guess who the dog food was for?

They won their case.

Why not? I know alot of people who pay for the cattle dogs out of the ranch account. It is no different then buying a hot shot, or cattle pins.

 

[aplusmnt]

Shucks. I've always wanted a 300 Weatherby Magnum. Don't need it. Just want one. Maybe I can buy one for "the feral hogs" :lol: :lol: (just not in my ethics to do such things)

I understand what you mean, but I will be honest I look for every loop whole there is when it comes to taxes. Government has abused us by taking to much. I figure my only way to fight back is through my vote and tax returns. I won't cheat but when you own a business you can find many ways to make things a tax deduction. Been audited once so far and passed so I will continue to be creative.

Ps. Do You need your carpets cleaned at the house? Need to make sure my Internet service is tax deductible ;-) :lol:

 

[HEREFORD ROADHOG]

Just have a couple quick questions concerning taxes.

I've got a little bit of land that I can run about 20 head on comfortably. My question is, if I get started this year with say 5-10 head, is it still possible to get a tax break?

Is there an over under on head count that must be met before I start claiming all my expenses on my returns?

I dont have a thousand acres so I'm not really into this to try and turn a profit. I've read enough on here to realize that that is not what is to be expected.

While I'm on that subject though, how many do most of you run before you begin to start to turn a profit? I figure my best benefit financially from running cattle would be the taxes based on the amount of land I have to play with.

first of all here is a rule for you. if you cant make any money on 10-20 head there is no need to get any bigger. like the hillbilly that lost money hauling firewood for $10.00 a cord ,his neighbor said "son you just need a bigger truck " .trust me, it wont help.

 

[SuperDave]

This is one my favorite type of questions.

Most people looking for a tax write off will normally spend more money that they saved by just paying the tax in the first place.

There are so many people out there who think you can just buy that 40,000 tractor and write it off, well you still spent the 40K and you won't ever get that kind of tax savings with 20 head or 100 for that matter.

Try putting the money in a 401K or IRA and lease out the land, it will make you more money that way.

JMO

Good post. But a 401K isn't nearly as much fun. Watching those babies learn to buck and run, a heifer grow into a cow is why most of us do it.

I agree Frankie, that is exactly why I do it.

I had a guy at work tell me this morning I HAD ALL THE MONEY because I own a few cows, he doesn't have a clue about what someone actually makes from this business.

Why not put the max you legally can into a 401K, AND watch the calves play as well? Best of both worlds.

This is more of what I had in mind. Initially I am getting in to the cattle business for just that, a business. All the things that can be wrote off during the year that can be tied to the business will be done as that. I plan on turning a profit once my herd starts to grow. Thats the bottom line.

 

[WORANCH]

Been my thought that a operation needs to show income and growth even if it is running in the negatative and taking a big deduction. Just about everything that runs your farm is deductable from your power to your phone bill, every nut bolt and pencil can be written off.
Got to keep excellent records and have a receipt for every line item.
We bought a motor home this year...to travel to sales and events and such...we'll see how our accountant handles this one.
Just my two bits worth....DMc

We travel 4-5 times ayear to sales and write off everthing .
Leaving next week on a trip and I'm going to write off meals hotel and shows .