Raised draft, breeding, dairy, or sporting
animals. Generally, losses of raised draft,
breeding, dairy, or sporting animals don't result
in deductible casualty or theft losses because
you have no basis in the animals. However, you
may have a basis in the animal and therefore
may be able to claim a deduction if you use inventories to determine your income and you included the animals in your inventory.
When you include livestock in inventory, its
last inventory value is its basis. When you lose
an inventoried animal held for draft, breeding,
dairy, or sport by casualty or theft during the
year, decrease ending inventory by the amount
you included in inventory for the animal. You
can't take a separate deduction.
this is from IRS PUB 225 for farmers.
in short no basis in the animals that died no deductible loss.
