Tax Reporting Advice for Farming Clients

Amanda Hensley
Staff Accountant
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Depreciate vs. Inventory

Livestock held primarily for sale by for-profit farmers must be included in inventory. However, livestock held for draft, breeding, or dairy purposes can either be included in inventory or depreciated as the farmer chooses. Both options have advantages and disadvantages, so the decision is ultimately based on whether farmers prefer a current benefit or future benefit. If farmers choose to depreciate the livestock, they will receive a current depreciation deduction. However, this will decrease the farmer's basis in the livestock and therefore increase any gain when the livestock is sold.

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By santhosh
Jun 26th 2015 01:11

NICE, but you haven't mentioned any rate of depreciation on livestock?

Thanks (1)
By Ario
to santhosh
Nov 23rd 2016 07:32

Dear NICE, for livestock especially for dairy cows do not have specific number, as you know this is the way to compute depreciation (current price-initial price)/ life time. with this method you can find it fast and simple but it is not precise and if you would contact me [email protected]

Thanks (1)