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Is a person required to depreciate cows? And if a person does how many years do you depreciate them?

Forum|Forum|6 years ago
May 31, 2019
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Best answer by MargaretL

Livestock held for sale should be included in inventory.

Livestock held for breeding, dairy purposes can either be included in inventory or depreciated. You can make a choice.

Depreciating livestock will give a current depreciation deduction, but will decrease the basis of livestock and therefore increase any gain when it’s sold.

If you choose to inventory it, there is no depreciation deduction for the year(s), but any future capital gain will be taxed a t a lower capital gain rates.

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SweetieJean

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TaxGuyBill

What are the cows used for? Dairy? Resale? Slaughter? Other?

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SweetieJean

Breeding? Personal use only?

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steuk40Author

Breeding- stock cows

MargaretLAnswer

Livestock held for sale should be included in inventory.

Livestock held for breeding, dairy purposes can either be included in inventory or depreciated. You can make a choice.

Depreciating livestock will give a current depreciation deduction, but will decrease the basis of livestock and therefore increase any gain when it’s sold.

If you choose to inventory it, there is no depreciation deduction for the year(s), but any future capital gain will be taxed a t a lower capital gain rates.

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steuk40Author

Thank you. I have not been depreciating them because my tax person said not to years ago. He said it was best not to, but my new tax person said I should but I don't want to.