Why do people have cattle if its so unprofitable?

[BrianL]

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.

Exactly!







Plus...Brian states that you can expense the equipment if you run cows. I may be wrong (I was once), but I believe you can only expense the depreciation on the equipment over time (it's useful life?), not the immediate cost of the tractor, equipment, etc. Here is the expanded info on the link I previously posted for those who don't take the time to open the link:

Few years back you could expense 100% equipment in the year is was purchased. Same way when people were buying those electric vehicles and getting a tax rebate equal to or close to what they paid.

5 years is the norm, but it can be AS SHORT as a year.

https://www.irs.gov/newsroom/tax-reform-changes-to-depreciation-deduction-affect-farmers-bottom-line

Also a big thing is producing a crop, being grains, hay, or livestock for market. The differing government programs that most farmers/ranchers can participate in allow a little more to it than the guy that has 5 acres, 3 horses, and a milk cow. NRCS says I'm a farmer/rancher. But everyone has to determine their own level of risk, and what they feel they can justify in an audit. I'm pretty use to audits. I have two audit/exams a year in my work, so I ain't skert of an audit But I also stay on what I think is my side of that gray line.

I have never been able to find that a business needs to make a profit 3 out of 5 years in actual IRS guidelines or publications.

[cattlelackranch]

Interesting topic and responses.

[boy wonder]

My friend has been a small timer for many years and says he doesn't make a lot of money but his income taxes are in the 4% range most years. He works a full time job, but really enjoys his cattle work. Not sure this helps.

[planomustang]

The truth is, ranchers aren't in the cattle business, they're in the grass business. If you can covert grass into cattle cheaply, you can make a living. In my view, ranchers spend a lot of time learning about cattle. They should spend more time learning about grass and grain.

That is the truth. If you have to buy hay and you own your land ,then your ratios are wrong. Buying feed is different, because that is supplemental feed. Salt/mineral blocks are also important.

[RedBarn]

Have any of you cattle guys introduced Akaushi to your herd? Full blood or cross breeding? After doing a little research it seems like a no brainer given the current market. Asking for a friend.

[Dushon]

Have any of you cattle guys introduced Akaushi to your herd? Full blood or cross breeding? After doing a little research it seems like a no brainer given the current market. Asking for a friend.

I’d ask him where he plans on marketing his cattle. I am going to ai 6 cows to akaushi next year and see how it goes


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[kcmarullo]

I have a small cattle business, I am by no means making a killin but I am learning a lot. I have been told by a lot of cattlemen you don't farm the land you farm the Gubbermant ?

[Ilik2hunt]

I have a couple of cows on my place for tax purpose.
Better than having the government controlling my property over wildlife exemption

We have a wildlife exemption,I don't understand how the gov. is controlling my land,please fill me in.

[Texans42]

I have a small cattle business, I am by no means making a killin but I am learning a lot. I have been told by a lot of cattlemen you don't farm the land you farm the Gubbermant ?

Nope you just put it in CRP and make millions.... lol

I’d love for someone to show me how a declining insurance basis is more profitable then harvesting. It’s doesn’t work that way, but bob’s friend jorge’s uncle scam farms for insurance and make 100k a year in CRP, and nails the dought insurance predictions

[Ilik2hunt]

I'm a cattle rancher and have been all of my life. All ranches around me have been bought by city folks. After a year are so they go the wild life exemption.

We live 5.5 hours from our place,I didn't want to raise cattle are a call that our cattle is out,it's to far.We had a ag exemption but changed to wildlife as we were already doing the steps of the wildlife exemption anyway,so I mind as well get the benefit. With out that we couldn't afford the place.

[meltingfeather]

Can y'all explain these comments please? People are in the cattle business for the tax breaks? They actually are in the business to lose money so they can get tax benefits?

when you lose money you pay less tax

[RedBarn]

I’d ask him where he plans on marketing his cattle. I am going to ai 6 cows to akaushi next year and see how it goes


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No real plan on marketing right now, but He too is planning on AIing 40 to 50 head to registered Heartbrand Sire. Said he'll retain heifers and breed back to Akaushi (bull or AI). Steers will get scanned and if any grade high, figure out what to do next.

I'm pretty sure Heartbrand has a buyback program, but requires DNA test.

Bottom line I do know if you have cattle grading prime or close to, you should be making much more money than what standard grade brings.

[Dushon]

No real plan on marketing right now, but He too is planning on AIing 40 to 50 head to registered Heartbrand Sire. Said he'll retain heifers and breed back to Akaushi (bull or AI). Steers will get scanned and if any grade high, figure out what to do next.



I'm pretty sure Heartbrand has a buyback program, but requires DNA test.



Bottom line I do know if you have cattle grading prime or close to, you should be making much more money than what standard grade brings.

Heartbrand does have a buy back, and they pay for the dna testing and even pick the calves up for free. Think they pay .20 over market


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[JANKEII]

Not going to get in an argument.

The majority of wildlife exemptions require working hand in hand with a government entity/worker and, I just prefer not to have them telling me what or how I can do something. Or spend money on a helicopter to survey what I have. Hope you understand.

We have a wildlife exemption,I don't understand how the gov. is controlling my land,please fill me in.

[doghouse]

Wild life exemptions are great for cattle producers.