As was previously posted the IRS generally considers the breeding of cats and dogs as a hobby. However, if you are operating as a business with the intent to make a profit you may depreciate your breeding stock.
You may want to review https://Publication 225 (2021), Farmer's Tax Guide. This is for livestock operations but will provide you with an insight into what the IRS requires for animal breeding and selling.
As a general principle when you are breeding animals (dogs, Cats) for market (sale) your breeding stock is a depreciable asset. Their offspring have a tax basis of 0 dollars and you deduct the expense of raising them as it occurs so when you sell them the full sale price is taxable income.
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