Is a person required to depreciate cows? And if a person does how many years do you depreciate them?

[SweetieJean]

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[TaxGuyBill]

What are the cows used for?  Dairy?  Resale?  Slaughter?  Other?

[SweetieJean]

Breeding? Personal use only?

[steuk40]

Breeding- stock cows

[MargaretL · Accepted solution]

Livestock held for sale should be included in inventory.

Livestock held for breeding, dairy purposes can either be included in inventory or depreciated. You can make a choice.

Depreciating livestock will give a current depreciation deduction, but will decrease the basis of livestock and therefore increase any gain when it’s sold.

If you choose to inventory it, there is no depreciation deduction for the year(s), but any future capital gain will be taxed a t a lower capital gain rates.

[steuk40]

Thank you.  I have not been depreciating them because my tax person said not to years ago.  He said it was best not to, but my new tax person said I should but I don't want to.

[TaxGuyBill]

Does a cow cost less than $2500?

Tell your new tax person that you have an "accounting procedure for non-tax purposes" to deduct any expense of $2500 or less.  Then tell him that you want to make the "de minimis" election to deduct all expenses less than $2500.