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Message
Cattle as extra income source/tax write off
Posted on 2/19/18 at 9:19 am
Posted on 2/19/18 at 9:19 am
A smart guy I know who is a lawyer and raises cattle said to buy some cows as a secondary income source and tax write off. He’s got like 40 head of cattle but says you only need like 15 for tax write of purposes. He says you can own the land and the cattle or just the cattle and have someone else raise and take care of them for you. Since this is more of a tax write off, you don’t really have to make much of a profit.
Also, he is not offering it raise the cattle for me. He would not be involved.
Also, he is not offering it raise the cattle for me. He would not be involved.
9
Posted on 2/19/18 at 9:28 am to white perch
Yep. You can write-off feed, fuel, maintenance, meds. We have a small “farm” and it helps some.
Posted on 2/19/18 at 9:30 am to white perch
quote:
Cattle as extra income source/tax write off
quote:
Since this is more of a tax write off, you don’t really have to make much of a profit.
what is your goal - extra income or tax writeoff?
Usually these elaborate tax-writeoff strategies don't benefit you as much as you think, if at all.
Posted on 2/19/18 at 9:55 am to ATLdawg25
From my experience you can write off quite a bit but you have to have an income associated with the expense. It’s risky to think you can write off a loss every year on a small farm operation like that. If it deemed that the farm is a hobby or not intended to produce an income you don’t really have a business so those expenses aren’t deductible or will be subject to the decision of the IRS in an audit. There are lots of people that do it but it’s looked at by the IRS more than many businesses.
LINK
LINK
Posted on 2/19/18 at 10:19 am to white perch
Seems like a really labor intensive way to get a tax writeoff (3 AM calls about cattle being out from a fence that is down, etc.). It's an amazing lifestyle if you have the heart for it, but not for most people as a passive side investment imo. If you have to pay someone else to manage the cattle for you you will almost surely be losing money (before any tax writeoff) as well. The average cow calf herd is ~50 cows and has an owner that has no idea about their cost of production, does it more for the lifestyle, and so they continue to produce even when it should be uneconomical for them to do so.
Posted on 2/19/18 at 11:28 am to white perch
In order for this to work like you want, you'll have to have the cattle and do the work yourself.
I've been approached a couple times by professionals wanting to have a small cow herd for the tax write off purposes and have me manage them. The problem that arises there is that whatever they'd pay me would absorb all profits that could be made.
With cattle you have to show profit 3 of 5 years or have some excuse as to why there aren't any profits.
There's a reason most cattle producers are less than 50 head and it isn't there primary source of income.
I've been approached a couple times by professionals wanting to have a small cow herd for the tax write off purposes and have me manage them. The problem that arises there is that whatever they'd pay me would absorb all profits that could be made.
With cattle you have to show profit 3 of 5 years or have some excuse as to why there aren't any profits.
There's a reason most cattle producers are less than 50 head and it isn't there primary source of income.
This post was edited on 2/19/18 at 11:29 am
Posted on 2/19/18 at 2:28 pm to white perch
Spending $1.00 to save $0.30 is rarely advantageous. If you want the cattle as a hobby, then go for it. As others have stated, the tax savings aren't necessarily worthwhile.
Posted on 2/19/18 at 3:29 pm to white perch
Posted on 2/19/18 at 3:51 pm to iknowmorethanyou
quote:
Spending $1.00 to save $0.30 is rarely advantageous. If you want the cattle as a hobby, then go for it. As others have stated, the tax savings aren't necessarily worthwhile.
Falls into the mindset of keeping a home mortgage solely for the tax deduction, it somehow being better to give the bank a dollar to avoid giving the IRS 30 cents.
Posted on 2/19/18 at 4:10 pm to EA6B
Thank y’all for the responses.
Posted on 2/19/18 at 4:17 pm to white perch
You may want to look into the hobby vs business issues.
I used to joke that everyone in Texas had a ranch. Income tax issues a bit but there it's the ag exemption for property tax that is the real benefit.
I think it would be pretty cool to have some chickens and cattle and when I need some meat/poultry there you go. I however have no desire to actually raise said animals.
I used to joke that everyone in Texas had a ranch. Income tax issues a bit but there it's the ag exemption for property tax that is the real benefit.
I think it would be pretty cool to have some chickens and cattle and when I need some meat/poultry there you go. I however have no desire to actually raise said animals.
Posted on 2/19/18 at 5:15 pm to iknowmorethanyou
quote:This. All of this.
Spending $1.00 to save $0.30 is rarely advantageous. If you want the cattle as a hobby, then go for it. As others have stated, the tax savings aren't necessarily worthwhile.
Posted on 2/19/18 at 5:43 pm to GeneralLee
quote:
Seems like a really labor intensive way to get a tax writeoff (3 AM calls about cattle being out from a fence that is down, etc.)
This is so true. Speaking as a guy who has helped friends and family with their herds I can tell you that there are no days off when you run cattle. At least I don't have to worry about my cotton or corn getting out of the field one night to be run over on the highway.
I'd much rather devote my time to a money making endeavor than a money saver that quite possibly won't even save much.
Posted on 2/19/18 at 6:27 pm to EA6B
quote:
Falls into the mindset of keeping a home mortgage solely for the tax deduction, it somehow being better to give the bank a dollar to avoid giving the IRS 30 cents.
No, not at all. You're ignoring the effects of inflation. It is better to give the bank a dollar than to hold on to that dollar if inflation is high enough.
Posted on 2/19/18 at 7:19 pm to white perch
With the significant increase in the standard deduction, it’s probably not worth it. I’ll be taking the standard deduction next year for the first time since I’ve bought a house.
Posted on 2/19/18 at 7:26 pm to iknowmorethanyou
quote:
Spending $1.00 to save $0.30 is rarely advantageous. If you want the cattle as a hobby, then go for it. As others have stated, the tax savings aren't necessarily worthwhile.
SO MANY people do not understand this. It really blows my mind
Posted on 2/19/18 at 7:27 pm to Ric Flair
quote:
With the significant increase in the standard deduction, it’s probably not worth it. I’ll be taking the standard deduction next year for the first time since I’ve bought a house.
The standard deduction has nothing to do with using a Schedule F to offset income
Posted on 2/19/18 at 9:43 pm to tigereye58
quote:
From my experience you can write off quite a bit but you have to have an income associated with the expense. It’s risky to think you can write off a loss every year on a small farm operation like that. If it deemed that the farm is a hobby or not intended to produce an income you don’t really have a business so those expenses aren’t deductible or will be subject to the decision of the IRS in an audit. There are lots of people that do it but it’s looked at by the IRS more than many businesses.
This. Scrutinized highly by irs
Posted on 2/20/18 at 12:37 pm to white perch
Ill be filing my taxes soon for the first time looking at farm write off. I kept a detailed log of all expenses and mileage. I had $11k in expenses, $4k in income.
Im certain that the break I see in my taxes wont put a dent in the debt I created but im hoping for some added bonus. Of course I did it as a side business and long term investment and not for the sole purpose of having a tax write off
I also didn't create an LLC or get a separate tax ID since im working from personal bank accounts. I plan to do that as my operation grows but currently I just don't have the extra income to set aside to maintain accounts. Im hoping this doesn't come back to bite me in the arse
Im certain that the break I see in my taxes wont put a dent in the debt I created but im hoping for some added bonus. Of course I did it as a side business and long term investment and not for the sole purpose of having a tax write off
I also didn't create an LLC or get a separate tax ID since im working from personal bank accounts. I plan to do that as my operation grows but currently I just don't have the extra income to set aside to maintain accounts. Im hoping this doesn't come back to bite me in the arse
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