Why do people have cattle if its so unprofitable?

[DeadEyeB]

Why and how depends and usually several things that determine why.

Ag Exemption. Yes it keeps county from taxing the **** out of you based off land values.

Income or IRS... This is where it gets gray but can really help the people that have a 8-5 job and no tax breaks. Most people want land, then a tractor($60K), the equipment(50k), welders(5k), UTVs(15k) cool tools(25K)... Those can all expensed, with cattle, off your 1040, but not on a wildlife exemption. Example you work a 8-5 and make $70K a year. You will probably pay about 10K in federal taxes. If you had a farm profit loss and expensed and depreciated assets you might not pay any based on what IRS guidelines were for that year. You still have to pay for all the "stuff" but most of that you would need/want with or without cattle. Might as well be able to get the tax breaks. You also saved $12,800 on state taxes when you purchased all that equipment. Those 20 head of cattle may have only netted you 1500-2500, but they saved you several thousand in federal taxes.

It's kinda like rental property. It is not very good for income, but really good at building wealth.

There is some seriously false info here guys be warned. Hobby farms can not expense those things, and if you do expense equipment you'll have to do it with a depreciation schedule which means if you ever sell said equipment you have to pay income tax on the sale.

Bottom line though you have to have a legitimate business that makes money to get those expenses. Sure you can get away with it for years, but when the IRS catches you you'll not be happy.

Read up on hobby farm laws and how they apply. If you have a losing cattle operation it's not smart money to try to trick the IRS into giving you tax breaks.

Very dangerous game to play for such little return.

[BrianL]

There is some seriously false info here guys be warned. Hobby farms can not expense those things, and if you do expense equipment you'll have to do it with a depreciation schedule which means if you ever sell said equipment you have to pay income tax on the sale.

Bottom line though you have to have a legitimate business that makes money to get those expenses. Sure you can get away with it for years, but when the IRS catches you you'll not be happy.

Read up on hobby farm laws and how they apply. If you have a losing cattle operation it's not smart money to try to trick the IRS into giving you tax breaks.

Very dangerous game to play for such little return.

What I described is not a hobby farm.

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[Texans42]

What I described is not a hobby farm.

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Via 20 head it is.

End of the day there is money to be made in cattle, and it’s not from buying or building structure , or depreciating toys/assets, nor is it some mythical Federal Sub.

It’s simple, spend the least amount to get the most gain, or recruitment depending on what program you run.

Mind blowing people think you buy profitablity via tax write off/depreciation

[catslayer]

I can make you a small fortune in the cattle business.

But you gotta give me a large fortune to start with...

It's doable ... Been done forever, that said I think the market is in a sick place currently that will have to crash to be corrected and that will hurt a lot of folks

[BrianL]

Via 20 head it is.



End of the day there is money to be made in cattle, and it’s not from buying or building structure , or depreciating toys/assets, nor is it some mythical Federal Sub.



It’s simple, spend the least amount to get the most gain, or recruitment depending on what program you run.



Mind blowing people think you buy profitablity via tax write off/depreciation

Hobby farm is defined by IRS. You can look it up. No one I know runs 20 head of momma cows as a hobby. I still stick with my post.

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[BrianL]

Also nearly 1/2 of all cattle produced in the US come from small cattle operation, less than 100 head with average being 47 head per.

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[Burnadell]

Hobby farm is defined by IRS. You can look it up. No one I know runs 20 head of momma cows as a hobby. I still stick with my post.

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My feeble recollection is/was that you had to show a taxable profit 3 out of 5 years or it was not considered by the IRS as a legitimate ag business. My numbers may be a little off, but they will not let you continue to show losses every single year and qualify as a business.

If you show taxable losses for a number of consecutive years running cattle and get audited, the IRS can require you to show a business plan and prove an intention to make a profit.

[BrianL]

My feeble recollection is/was that you had to show a taxable profit 3 out of 5 years or it was not considered by the IRS as a legitimate ag business. My numbers may be a little off, but they will not let you continue to show losses every single year and qualify as a business.

I have 8 figure revenue farmers that haven't shown a profit in the 20 years I have been dealing with them. I believe the wording is attempt to make a profit.

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[Texans42]

Also nearly 1/2 of all cattle produced in the US come from small cattle operation, less than 100 head with average being 47 head per.

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20 head isnt 47.


47 you starts to be close to an actual living income

20 head doesn’t.

Call it what you want.

[doghouse]

Probably better to not be getting a W-2 are a 1099 from someone to qualify.

[BrianL]

20 head isnt 47.





47 you starts to be close to an actual living income



20 head doesn’t.



Call it what you want.

I never said it was a living, I said it was an IRS qualified ag business. Attempting to make a profit, and attempting to make a living at it are completely different things. For most people cattle are a part of their living.

There are people that have several smaller businesses that make up their living.

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[cfortner]

Corb Lund - Cows Around - YouTube


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I came here just to see if someone has already done this

[Texans42]

I have 8 figure revenue farmers that haven't shown a profit in the 20 years I have been dealing with them. I believe the wording is attempt to make a profit.

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It’s not hard for me to purchase 2 million a year or more in farm equipment, cattle not so much. You can only do so many ranch improvements. Current farm program income limits, where probably put in place by John Deere.. lol

[jds247]

20 head isnt 47.


47 you starts to be close to an actual living income

20 head doesn’t.

Call it what you want.

I'm not sure what you call a living but I ran 140 head on free land for years and never came close to what i call a living.

[BrianL]

It’s not hard for me to purchase 2 million a year or more in farm equipment, cattle not so much. You can only do so many ranch improvements. Current farm program income limits, where probably put in place by John Deere.. lol

I hope so but for my little operation it still feels never ending right now... new fence, corral, squeeze chute, hay equipment, fencing, fertilizer, gates.. More fencing... Bigger tractor for baler...I could spend over $100k tomorrow. But someday I will make a PROFIT!!.. maybe...lol



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