Money in cattle

[Jogeephus]

I got a phone call from my accountant today forewarning me of my tax liability. Unfortunately I was a little under the weather just before year end and worrying about this type stuff was the last thing on my mind. Unfortunately I'm going to owe a tidy sum on top of what I've already paid in thanks to the cattle. I sure could use a new grain drill a new barn or several other things on my want list but I played it conservative and frugal so it looks like the gov't will be getting the grain drill and not me. How do you deal with stuff like this? Prepay fertilizer bills, buy equipment. Trade in older stuff? I'd appreciate any ideas. Oh, the good news is my accountant said that I don't have to worry about being considered a hobby farmer in the eyes of the IRS. :help:

 

[bigbull338]

well joe you asked a good q.an heres how weve always dealt with it.we would tell our tax to tell us if we was gonna turn to much profit in advance.so then we could figure out how much we needed to spend.thus keeping uncle sam from getting it.when i spend any money big or small its always a write off for the farm.like this year i bought a squeeze chute.an also planning to buy more cows.

 

[jkwilson]

I usually do a dry run of my taxes around Thanksgiving to get an idea of where I stand. That leaves enough time to spend some money to adjust things as needed.

 

[1982vett]

How do you deal with stuff like this? Prepay fertilizer bills, buy equipment. Trade in older stuff? I'd appreciate any ideas. :help:

:shock: Last time I had a tax liability from cattle was 1992........Thanks for taking up my slack. I thought by now I should be able to show a profit on cattle but it hasn't materialized thanks to repair bills. Waiting on one of my tractors to "come back together"......about 4 years "profit" from the cattle to fix it. I deem a good year being one that the "loss" is smaller than the depreciation expenses. ;-)

Sure miss the calves from the cows I had to sell in late 2008 and early 2009. Taking a hit on the cash flow side.......seems it is only heading out and none comming in.

Congratulations for being successful..................having to pay taxes is your reward. I, on the other hand, just seem to work for nothing.... :lol:

 

[Jim62]

Gosh, are you saying that you CAN make money on cattle?

I had no idea...........

 

[traderaaron]

I generally feed cattle from late Fall into the first of the year so I have a feed bill to write off while the income won't occur until the following year, I am also buying bred Cows in November-December which are depreciable under sec. 179. I buy no equipment as I don't need any really so the money all goes back into cattle in ways that I can write off to shield the income.

I know ranchers and farmers that come around to feedlots and feedmills the end of year with some 100-200 thousand dollars checks to prepay feed.

 

[TexasBred]

I generally feed cattle from late Fall into the first of the year so I have a feed bill to write off while the income won't occur until the following year, I am also buying bred Cows in November-December which are depreciable under sec. 179. I buy no equipment as I don't need any really so the money all goes back into cattle in ways that I can write off to shield the income.

I know ranchers and farmers that come around to feedlots and feedmills the end of year with some 100-200 thousand dollars checks to prepay feed.

Prepaying will work once anyway if you need a big write off but if you consistently make good money, once you've done it you have to do it every year in order to not eventually get kicked in the butt. If you have those up and down years you can prepay on an as needed basis.

 

[Douglas]

You can still make an IRA contribution.

 

[traderaaron]

You can still make an IRA contribution.

And a self-employed person can setup a solo 401k and put very large amounts of money in it, much higher than an IRA. Although it's too late to set one up for last year.

 

[rkm]

I will trade you my problem for yours and through in the new grain drill. :lol:

 

[john250]

When you describe how you made money in 2009 in a book, the rights fees will keep your taxes paid for several years. Imbalancer semen must be hot!

 

[backhoeboogie]

I got a phone call from my accountant today forewarning me of my tax liability.

Congratulations on your success Jogee. Proud to see some of us doing it. '08 was a banner year for me all the way around. Then came some "change".

Hold over some hay and hold over some cows. Balance the bottom line in ways such as that.

 

[Jogeephus]

Congratulations on your success Jogee.

Thanks, but with such a painful slap on the wrist its kinda hard to view this as a success.

I appreciate the ideas and will definitely keep them in mind for next year. I think the best thing in my situation would have been to have prepaid my seed and fertilizer bill. This would have been an easy fix and would have easily balanced against the medical bills for this year but I was not on top of my game. I think next year you may want to just call me MR. DEDUCTION. :lol2: Just hope I got the income to make them useful.

When you describe how you made money in 2009 in a book, the rights fees will keep your taxes paid for several years. Imbalancer semen must be hot!

How bout these titles; "Storey's Guide to Raising Cattle Under the Radar" or "How to Barter or Trade Your way to Riches" or "The Imbalancer; Fact? Fiction? Or the Best Thing Since Sliced Bread?"

 

[1982vett]

.

When you describe how you made money in 2009 in a book, the rights fees will keep your taxes paid for several years. Imbalancer semen must be hot!

How bout these titles; "Storey's Guide to Raising Cattle Under the Radar" or "How to Barter or Trade Your way to Riches" or "The Imbalancer; Fact? Fiction? Or the Best Thing Since Sliced Bread?"

How about..........I Did it Once, Can I Do it Again? :lol2:

 

[Jogeephus]

Are you saying that even a blind squirrel will find a nut every now and then? :lol2:

 

[1982vett]

:lol: I guess it is something like that. You ammused us once..........now to really impress us you have to do it again.

Looks like you might have a pretty good chance. Them little 350# calves were bringing $1.50 a pound at the sale today.

 

[Jogeephus]

Yeah, prices are showing promise and if we keep having rain its going to be another good year but I do think I'll be planning a little better. I think I gotta learn how to play the game. Doing like King Solomon did stocking up on things just doesn't seem to work that great.

 

[Caustic Burno]

I got a phone call from my accountant today forewarning me of my tax liability. Unfortunately I was a little under the weather just before year end and worrying about this type stuff was the last thing on my mind. Unfortunately I'm going to owe a tidy sum on top of what I've already paid in thanks to the cattle. I sure could use a new grain drill a new barn or several other things on my want list but I played it conservative and frugal so it looks like the gov't will be getting the grain drill and not me. How do you deal with stuff like this? Prepay fertilizer bills, buy equipment. Trade in older stuff? I'd appreciate any ideas. Oh, the good news is my accountant said that I don't have to worry about being considered a hobby farmer in the eyes of the IRS. :help:

I feel your pain as my check just cleared the bank to them. The write off's are great if truely need the equipment. It gets down to what is the cheapest pay the taxes or the equipment and what leaves the most in the bank account. If you need the 40,000 dollar tractor I save roughly 5000 bucks in taxes but the account is down 35,000. You can't spend your way to wealth trying to write off to save on taxes. For every dollar you spend you save about twenty five cents in taxes again great deal if you need the equipment.

 

[Jogeephus]

CB I couldn't agree more. Never been one to farm for deductions just for the reasons you point out. What frustrated me was there were some legitimate expenses I could have spent some of the money on but when I put life on hold for a spell it gave the dogs the chance to catch me. Old fella once told me to hit the ground running and don't ever let your shirt tail touch your back. I think I understand what he meant now.

 

[GMN]

Neighbor up the road, around the end of december always has something new, not this year or last though, can always judge when the dairies haven't made squat, and the past 2 years are it. Some people would rather buy the equipment etc, than give the govt money owed-not sure which is smarter, can't say I have been on that end of the stick ever-although i think it could be fun to be.

GMN