Where you enter the loss for livestock depends on how you acquired the livestock and whether the livestock was for resale or draft, breeding, or dairy purposes.
Purchased livestock for resale:
If you are a cash basis farm and you purchased to cow for resale then you report the cow as inventory. To report the loss from the cow you would go to Farm Income and then Livestock, grain, produce, customer work, co-ops and select Start or Update. In this section you would indicate zero in the box by "Sales of Livestock and Other Items Bought for Resale" unless you sold other livestock this year. If you did sell other livestock then you do not need to increase the amount there for the "sale" of the cattle you lost. In the box for "Cost of Items Bought for Resale" you would include the purchase price of the cow that died. This will give you a reduction in income for the death of the cow.
If you are an accrual basis farm you report a Cost of Goods Sold. to report the loss of the cow you select Start or Update next to Cost of goods sold under the Farm Income section. You would reduce your ending inventory amount by the purchase price of the cow or by the unit price if using the unit-livestock-price method.
Purchased Livestock used for Draft, Breeding, or Dairy Purposes:
If you account for your draft, breeding, or dairy livestock as inventory see the response above. If you accounted for your purchase as an asset you can record the loss of the cow by indicating the cow was sold. For the Sales Price you would enter 0 (zero).
Livestock that was born to you:
Since you have no basis (purchase price) in livestock that was born to you, you are not able to take a loss if the livestock dies. You can deduct any feed, medical, or other ordinary expenses used to raise the cow or to prevent the death of the cow as operating expenses of your farm.
