farm loss - death of cows

Forum|Forum|4 years ago
January 26, 2022
1 reply
15 views

We have a small farm and file a Schedule F. In 2021 we had 11 (healthy) cows die in a manner of 2-3 weeks. Had our large animal vet come out and he had no definitive answers. Sent two of the cows to a state university to have a necropsy performed to determine the cause of death and it came back inconclusive. Can I claim this loss on our Schedule F and if so how? How do I determine their value and where on the form?

JamesG1

Level 15

Possibly, what is the nature of your farming operation?

IRS Publication 225 page 7 states:

Livestock held primarily for sale must be included in inventory. Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory.

Does the nature of your farming operation require you to value the livestock in an inventory? Do you record for tax purposes that animal A has a cost basis of $x and animal B has a cost basis of $y?

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LandT94Author

Level 2

Our farm is cash basis, we primarily raise our cows to sell. I have a record of what we paid for each cow, but for tax purposes the only livestock I would value a good bit more than all the others is our bull. Luckily our bull is still alive and was not affected by the recent deaths.

LeonardS

Level 14

Any cattle that were purchased for sale do not have a tax basis, All costs are expensed as they occurred; purchase price, feed, vet bills, etc. There is no capital loss to be reported as the cattle had a zero basis for tax purposes and therefore, no deduction is available for the loss.

However, if your loss was to breeding stock, that had a tax basis, then you would have a loss equal to the basis of the livestock lost. This would be reported as a capital loss on your tax return.

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