Sale of Livestock

[Bart]

I was told by a client that the sale of a cow that they raised was not taxable this year. Has anyone else heard this?

[RitaB]

I was told by a client that the sale of a cow that they raised was not taxable this year. Has anyone else heard this?

Just Joe Mechanic.

[TaxmannEA]

A raised cow would go on 4797 with no basis or depreciation. This would transfer to the Sch. D as a capital gain. Tax rate of capital gains if marginal rate is less than 15% is -0-. So it could be true. ( Remember, holding period for long-term on breeding cattle is 2 years.)

[Lion EA]

Did they have to sell more than the usual amount of their herd this year due to weather conditions? They might be eligible to defer some of their sales.

[RitaB]

All the following assumes we are discussing an actual farmer, not somebody selling personal property. (It could happpen, and that would be Sch D.)

The sale price of a raised farm animal goes on Sch F, line 4. Expenses of raising the animal would show up in your feed, fertilizer, depreciation on your barn, vet bills, etc.

An animal being depreciated (brood animal) that is sold is entered on 4797, flows to Sch D.

If you purchased an animal and sold it without depreciating it (as in inventory for resale), you enter sale price on Sch F, line 1 and your purchase price on Sch F, line 2. Your other costs show up in the expenses on the lower part of Sch F.

Yeah, and if you're selling because of extreme weather conditions (or something), there are provisions for postponing the gain (or claiming it over more than one year or something). Never done that, so I will shup up at this point. Now.

[TaxmannEA]

Rita, I might add one point to your statement. A raised cow (female that has produced a calf) is treated as breeding stock and sold on the 4797. There is no basis or depreciation shown in this particular case. Non-breeding animals all go to Sch. F.

[RitaB]

Rita, I might add one point to your statement. A raised cow (female that has produced a calf) is treated as breeding stock and sold on the 4797. There is no basis or depreciation shown in this particular case. Non-breeding animals all go to Sch. F.

Well, I did not know that. Hmm. Thank you very much for not giving me the old "you are wrong smackdown."

Say, I am about to sell my own Betsy (actually Annie) cause she has been a flat tire for three years (no calves).

I will say that I have been really good to that cow. It just didn't work out. Sniff. Sniff.

[TaxmannEA]

Well, I did not know that. Hmm. Thank you very much for not giving me the old "you are wrong smackdown."

Say, I am about to sell my own Betsy (actually Annie) cause she has been a flat tire for three years (no calves).

I will say that I have been really good to that cow. It just didn't work out. Sniff. Sniff.

I know, they almost get to be like pets, don't they. Of course, as a gesture of appreciation you could always throw a barbeque for her retirement!

[RitaB]

I know, they almost get to be like pets, don't they. Of course, as a gesture of appreciation you could always throw a barbeque for her retirement!

My KIDS are actually saying that, too. Something changes from 8 to 18, huh? It's like they were sharpening knives in their heads when I told them she was outta here. I thought it would be rough on them. Little did I know.

[Lion EA]

You did get a bull involved, right?! Why is it that if the bull doesn't do his job, he gets to stay; but when your cow didn't keep up her end of the bargain, she's outta there? You're not getting rid of a kid or two, too?!

[OldJack]

>>A raised cow (female that has produced a calf) is treated as breeding stock and sold on the 4797.<<

Also, to qualify as breeding stock for 4797 reporting the horse or cow must have been held for more than 2 years.

[RitaB]

You did get a bull involved, right?! Why is it that if the bull doesn't do his job, he gets to stay; but when your cow didn't keep up her end of the bargain, she's outta there? You're not getting rid of a kid or two, too?!

Yeah, three different bulls, actually, so it's Annie. Either she's sterile or never in the MOOOO-D. Arr arr.

I will keep the kids.

[Lion EA]

A real groaner, Rita! :spaz:

[RitaB]

A real groaner, Rita!

Yeah, my kids thought so, too. My daughter said, "Mom. No. No."