Cattle- accounting - tax issue

[fishheadbob]

I ran cattle for 25 years and maybe showed a profit in 2 or 3. Only time I made real money was when I sold out, and that was a capital gain. It's already been said but most anything you buy that can be tied to your operation is likely a business expense and can be written off somewhere somehow.

I worked for the Feds all my life; every government agency is understaffed including the I.R.S. From a cost effective point of view your not worth it for the I.R.S. to take a hard look at you as audit employees cost money and they don't have enough of them. If they turn you inside out, screw you every chance they can, and reject every marginal thing you ever thought of writing off, how much are they going to make ? Maybe a few hundred bucks ? Better to audit a bigger business and put those same employees to good use bringing in thousands.

 

[beowulf]

As I prepare to get back into the cattle business, I have done a bit of research and thought I would share a particularly useful link:

Small Farm Tax Guide | Rural Tax Education

extension.usu.edu

 

[beowulf]

I ran cattle for 25 years and maybe showed a profit in 2 or 3. Only time I made real money was when I sold out, and that was a capital gain. It's already been said but most anything you buy that can be tied to your operation is likely a business expense and can be written off somewhere somehow.

I worked for the Feds all my life; every government agency is understaffed including the I.R.S. From a cost effective point of view your not worth it for the I.R.S. to take a hard look at you as audit employees cost money and they don't have enough of them. If they turn you inside out, screw you every chance they can, and reject every marginal thing you ever thought of writing off, how much are they going to make ? Maybe a few hundred bucks ? Better to audit a bigger business and put those same employees to good use bringing in thousands.

fishheadbob, thanks for replying. We had cattle from 1986 through 2015 and like you, rarely had much profit. But the cattle did graze the hills down to mitigate any fire risk. Yeah, I don't think the IRS would be interested in my losses, and I was always confident I could support every single item I deducted. And the deductions I might be taking would be modest whether taken as full deductions or as items deperciated. Most deductions are straight forward and documented and I have always been fairly conservative regarding those deductions which are not easy to pin down, e.g., 10% of the electricity for the well, a portion of the insurance, transportation related to the cattle, etc. As for restarting now, I have found several useful online articles about deducting 'start up' costs and think I am well prepared. I did contact an accuntant I was referred to, but was not impressed - and he wanted $750 to set up the books - books I was used to managing for many years by myself.