Discussion:Do you depreciate animals kept for breeding business?

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Discussion Forum Index --> Tax Questions --> Do you depreciate animals kept for breeding business?

Jenkins (talk|edits) said:

8 January 2006
I have an Aviary and Breed and sell parrots as pet birds. I have tried to research to find how to handle the breeders on our taxes. This is my first year preparing taxes and the person who did my taxes last year put the breeders as Inventory and I disagree with that. On the schedule F it specifically mentions not to file schedule f if you are a breeder of dogs,cats or other pets. However it does not give any further directions on how to handle pet breeding businesses other than to say they should file a schedule C. Does anyone know where I can find this information in print?

Solomon (talk|edits) said:

8 January 2006
Not included in 1231 property in Pub. 544.

Laurie (talk|edits) said:

9 January 2006
I have had a dog breeding kennel for 8 years and prepared the taxes. The business goes on a schedule C. I depreciate each breeding dog as 5 year property. Pretty much the same as a cow on Schedule F.

PGattoCPA (talk|edits) said:

9 January 2006
Inventory treatment for the breeders is incorrect and 5-year property treatment for the breeders is incorrect.

The correct answer is 7 years for "regular tax" depreciation purposes and 12 years for "alternative minimum tax" purposes. The reason being that the breeder birds (or any other animal (including dogs) that is not considered as "livestock" by the tax rules) are not specifically described in any asset class and thus default into the 7-year GDS (used for regular tax calculations) class-life category. The ADS recovery period (used for alternative minimum tax calculations) is 12-years.

From the IRS' Market Segment Specialization Program Audit Technique Guide on Livestock (dated May 16, 2000) discussion on ostriches, emus and rheas ("ratites"):


IRC section 168 (PGattoCPA comment: this sections deals with depreciation)

Ratites are not specifically described in any asset class and thus default into the 7-year GDS class-life category. The ADS recovery period is 12-years.

IRC section 179 (PGattoCPA comment: this sections deals with the immediate expensing of otherwise depreciable assets)

These birds probably qualify for the election under IRC section 179 (See PLR 8817003). The issue encountered is whether the purchased bird/chick/egg are being “placed in service”. The ratite breeding stock should not be expensed under IRC section 179 unless they are “placed in service” during the year. Immature birds and eggs are not eligible for the 179 expensing election.


Later on, the guide discusses the exact same treatment for other animals:


A few of the animals you may encounter on the “alternative livestock” farms include miniature donkeys, miniature horses, the llama family (vicuna, guanaco, alpaca, and llama,) deer, elk, reindeer, bison, miniature pigs, sport sheep, lemurs, big cats, wallabies, wallaroos, monkeys, parrots, alligators, and munchkin cats. The list is endless.


To the person who mentioned dog breeding, you may notice that dogs are not on the list. However, the guide is aimed at "exotic" animals since there was confusion as to whether the "exotics" could be considered livestock. There was no confusion in the determination that dogs are not livestock.

Jenkins (talk|edits) said:

11 January 2006
Thank you, PGattoCPA. You are a great help and you confirmed what I beleived was the correct way to go about this, but I could not find proof.

Incognito (talk|edits) said:

2 March 2009
Can you get 50% special depreciation allowance for the purchase of a bull? Or is this considered a used asset?

CrowJD (talk|edits) said:

2 March 2009
If you kin get a bull to tell you the truth, that's the problem. That's why they started fighting them over there in Spain, even when they stopped torturing the common man. The Inquisition never ended in my book. So even today, when a teenager denies what he's been a doing, and we know full well that he's been out with a lady cow, we say he's full of bull.

Riley2 (talk|edits) said:

2 March 2009
Yes, I agree with CrowJD, unless the bull has a health problem, he is probably used goods.

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