cow bull depreciation - taxes

[cypressfarms]

Learned a valuable lesson today about taxes and cattle. Went to the local H & R Block this morning, and was very surprised when the lady said that I would be getting back about 30% less than last year. For 2005 I spent about $57,000 on fencing and buying cattle for a new place. In 2004 only spent about $10000 including everything.

I got back home, still scratching my head, and called my uncle who's a CPA, to ask his advice. After about 5 minutes on the phone he had saved me thousands. I didn't know but you can tell the accountant how long to depreciate your cattle. The H & R Block woman depreciated all cattle I bought in 2005 over 7 years. My uncle recommended 5 years for cows, and 3 years for bulls.

For the fencing, my uncle asked me if it was all new, or was some of it repairing or maintaining old fences. Turns out the H & R lady listed it all as new, and thus depreciated it over 10 years. Any repair or maintenance can be fully deducted in that year.

I went back to H&R Block, and they looked at what my uncle had recommended, and said "Yes, we can do it that way, if you like". The will ammend my filing free for me, and it looks like I'll be better off than last year after all. Just thought I'd pass along some tips if anyone was interested.

 

[Running Arrow Bill]

It Costs No More To Go First Class...and can even save you money.

Solution: Use a CPA for your farm & ranch tax matters.

JMO

 

[mhoback]

That is what you get for going to H & R Block. You really should be using a CPA with experience with farm and ranch taxation. They can really save you alot of time, money, and stress. Your uncle is right on most parts, but I will disagree with him on the bulls. They should be depreciated on a 5 year life just like the cows. If you are looking for more deductions on your Schedule F, you may want to consider taking section 179 depreciation.

 

[wiggles]

Thank you for the information. I use an accountant but not sure how she is taking deductions off. Will check with her as just took taxes in yesterday. Your information was very timely.

 

[mitchwi]

That is what you get for going to H & R Block. You really should be using a CPA with experience with farm and ranch taxation.

Now that is a great statement

 

[kb5iod]

My wife is a CPA with a lot of farm accounting experience. It is amazing how many dollars people let slip away by not using a professional. It is often assumed that H & R and the like are cheaper than a qualified CPA and many times this is not the case. Remember, previous returns can be amended and it can be advantageous to let a CPA review these for errors after the H & R Block people have done their damage. Just for comparison, how many people would let someone who has spent a few weeks reviewing the principles of surgery operate on them. Not many. They want a qualified surgeon with the training, skills, and experience.