It depends:
- Livestock held for sale can be part of your inventory.
- Livestock for draft, breeding or dairy purposes can be inventory or can be depreciated.
- If you are breeding livestock, it is inventory.
Inventory can be entered with the cost of good sold while assets are depreciated.
Take a look at Publication 225, Farmer's Tax Guide and determine which rules apply to your livestock and how they need to be treated.
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