taxes

[Wayne Folsom]

when raising cattle if a newborn calf dies can it be claimed as a loss?

 

[jkwilson]

Nope. You are already deducting all expenses of producing the calf.

 

[farmwife]

when raising cattle if a newborn calf dies can it be claimed as a loss?

No offense jkwilson, but we always claim losses on the cattle that die. There is a different way to claim a cow that is on the inventory versus a calf that not in production. We use H&R Block for our taxes and the losses are claimed everytime. I would contact your tax person; it can be done.

 

[Frankie]

when raising cattle if a newborn calf dies can it be claimed as a loss?

No offense jkwilson, but we always claim losses on the cattle that die. There is a different way to claim a cow that is on the inventory versus a calf that not in production. We use H&R Block for our taxes and the losses are claimed everytime. I would contact your tax person; it can be done.

If you buy a cow, you can claim the loss if she dies before you've depreciated her fully. But you're not supposed to claim a dead calf born on your place, because, as jkwilson says, you should have already charged off the costs of getting that calf, depreciation, feed, vet, etc on the cow.

As far as H&R Block goes, I haven't used them in 30 years. They're not the most knowledgable people around. Yes, contact your tax person; one that will go to the IRS with you if you're audited.

 

[aplusmnt]

Can you deduct the loss of say a 3 year old cow that you raised on the farm? Is it only you can not deduct a young calf or is that cow would never be able to be counted as a loss?

 

[Frankie]

Can you deduct the loss of say a 3 year old cow that you raised on the farm? Is it only you can not deduct a young calf or is that cow would never be able to be counted as a loss?

According to our CPA, nothing we raise can be deducted as a loss if it dies, because we deduct all the expenses in raising it: feed, vet expenses, etc.

 

[OklaBrangusBreeder]

I have a Masters Degree in Taxation, and I'm here to tell you you cannot deduct a "loss" on the death of a raised animal (regardless of its age at death). No way at all...

Those costs of raising that animal were deducted at the time they were incurred. So (speaking in tax language) you have no "basis" in the raised animal to claim at death.

Anybody preparing a tax return otherwise is in error.

 

[Running Arrow Bill]

I have a Masters Degree in Taxation, and I'm here to tell you you cannot deduct a "loss" on the death of a raised animal (regardless of its age at death). No way at all...

Those costs of raising that animal were deducted at the time they were incurred. So (speaking in tax language) you have no "basis" in the raised animal to claim at death.

Anybody preparing a tax return otherwise is in error.

You are correct! Our CPA Firm would concur.

One's "basis" is the acquisition cost of the animal (NOT their care, feeding, vet, etc., expenses that are "expensed"). One cannot depreciate something that did not "cost" anything (aka "the basis").

Just an example: Say one bought a heifer calf for $500. You spent another $1000 getting her to breeding age. When she was "breeding age", then you could "convert" her acquisition cost of $500 to start depreciating her as a breeding cow.

When it comes to tax matters, especially in the agricultural arena, I would not go with any tax person except a CPA (preferably one that was attuned to ag issues). Those "seasonal" tax people are just that...seasonal. Any number of them are "trained" in assisting individuals in filling out forms and other non-complicated tax matters. JMHO... ;-)

Even with our own small operation (average 40-50 head yearly), we end up with 40+ pages of detailed tax documentation and reports from our CPA firm...and, they will "professionally" represent you if you have an audit.

 

[A6gal]

According to our CPA, nothing we raise can be deducted as a loss if it dies, because we deduct all the expenses in raising it: feed, vet expenses, etc.

This is my CPA's stand on it also.

 

[aplusmnt]

Can you deduct the loss of say a 3 year old cow that you raised on the farm? Is it only you can not deduct a young calf or is that cow would never be able to be counted as a loss?

According to our CPA, nothing we raise can be deducted as a loss if it dies, because we deduct all the expenses in raising it: feed, vet expenses, etc.

I do not doubt this. But I am having a hard time understanding the IRS reasoning on it.

Say you deduct a $1,000.00 to raise a Heifer, or you pay a $1,000.00 to buy one. When she is say 4 years old you had an equal $1,000.00 invested into turning her into a cow. So it seems you should be able to deduct your losses on either raised or purchased once they are mature and a producing member of your herd.

 

[jkwilson]

I would contact your tax person; it can be done.

You can claim anything you want, but I won't be going to jail if I'm audited. H&R Block knows about as much about taxes as I know about opera, which is not a damn thing.

 

[OklaBrangusBreeder]

Say you deduct a $1,000.00 to raise a Heifer, or you pay a $1,000.00 to buy one. When she is say 4 years old you had an equal $1,000.00 invested into turning her into a cow. So it seems you should be able to deduct your losses on either raised or purchased once they are mature and a producing member of your herd.

You just answered your own question. If you "deducted" $1,000 to raise a Heifer, then you've already written off for tax purposes your out of pocket cost ($$$) of that Heifer. If you "deducted" that Heifer again on death, you would be deducting the same $1,000 on two different occasions. No way the IRS will EVER let that happen.

 

[Frankie]

Can you deduct the loss of say a 3 year old cow that you raised on the farm? Is it only you can not deduct a young calf or is that cow would never be able to be counted as a loss?

According to our CPA, nothing we raise can be deducted as a loss if it dies, because we deduct all the expenses in raising it: feed, vet expenses, etc.

I do not doubt this. But I am having a hard time understanding the IRS reasoning on it.

Say you deduct a $1,000.00 to raise a Heifer, or you pay a $1,000.00 to buy one. When she is say 4 years old you had an equal $1,000.00 invested into turning her into a cow. So it seems you should be able to deduct your losses on either raised or purchased once they are mature and a producing member of your herd.

Because you should be deducting that $1000 over the years you spent raising the heifer each year, as dam maintenance, feed, vet, vaccs, etc. If you don't deduct your expenses yearly then talk to your tax guy and see if you can claim the loss if she dies.

 

[aplusmnt]

Say you deduct a $1,000.00 to raise a Heifer, or you pay a $1,000.00 to buy one. When she is say 4 years old you had an equal $1,000.00 invested into turning her into a cow. So it seems you should be able to deduct your losses on either raised or purchased once they are mature and a producing member of your herd.

You just answered your own question. If you "deducted" $1,000 to raise a Heifer, then you've already written off the cost of that Heifer. If you "deducted" that Heifer again on death, you would be deducting the same $1,000 on two different occasions. No way the IRS will EVER let that happen.

Do you not get to deduct the purchase of the cow off your taxes also?

 

[OklaBrangusBreeder]

Do you not get to deduct the purchase of the cow off your taxes also?

Well, yes...

Technically, the only deduction you would be allowed for the purchased animal is the "Net Tax Basis" of the Cow. So, if the Cow cost $1,000 and you depreciated her at $200 per year for five years and she dies at the end of year three, the "deduction" at death would be the Net Tax Basis of $400.

 

[aplusmnt]

Do you not get to deduct the purchase of the cow off your taxes also?

Well, yes...

Technically, the only deduction you would be allowed for the purchased animal is the "Net Tax Basis" of the Cow. So, if the Cow cost $1,000 and you depreciated her at $200 per year for five years and she dies at the end of year three, the "deduction" at death would be the Net Tax Basis of $400.

Ok I see it now, I can be kind of slow at times. Since the cost of raising the heifer was all deducted up front she is in essence already depreciated out. Were the cow you only deduct her on a per year basis so if she dies you went in the whole as far as deductions are considered.

Eventually I come around I am just a little slower than most :lol:

Thanks!

 

[msscamp]

when raising cattle if a newborn calf dies can it be claimed as a loss?

No offense jkwilson, but we always claim losses on the cattle that die. There is a different way to claim a cow that is on the inventory versus a calf that not in production. We use H&R Block for our taxes and the losses are claimed everytime. I would contact your tax person; it can be done.

I would suggest you find a different tax preparation service. Animals that are born on your place cannot be deducted if they die.

 

[Wayne Folsom]

Thanks for all of the replys. My thoughts were that you couldn't deduct the animal either. Someone that I work with was telling me that I was missing out on dedutions but I believe he was and still is wrong.