Why do people have cattle if its so unprofitable?

[AntlerCollector]

Cowgirls are the reason.


Cowgirls like Cowboys.

You can't be a cowboy without cows.

[JTCowpoke]

I am still waiting for an explanation of why folks lose money for the tax breaks. Can you please explain the accounting?

I agree this is confusing. Here is how the tax breaks help some people.

First they have to have enough money to live on and are putting money back into savings. They use the savings to buy land run cattle. Lets say they are able to put 60K back into savings every year. If they put it into savings they may have to pay 35% tax on that money that goes to the government that you never get back. So instead of having 60K in savings they actually only end up with 60k-21K=39K in savings.

Now if they spent the 60K in buying cattle or tractor they own 60k worth of cattle or a tractor etc. and don't have to give the government 21K that they will never see again. So the cattle may not be profitable per say but you are kinda hanging on to your money instead of paying tax that you will never see again.

[PondPopper]

Lol. Side hustles and the 90’s were great/good

Hay
Welding
Hauling
Planting

Got to do it all and make equipment last FOREVER to make it. My newest tractors are 12ish years old now. Would cost nearly double to replace them and they will resale now for more than we paid new.

Land when we started $600-$850 ace.. now $3500-$8000

Feed now $12cwt.... milk $17ish cwt... ain’t much margin in there for labor, repairs, upgrades, rent

Calves- tanked. A bull calf is worth more born dead now. That’s the sad truth. Take it to the sale barn and after commission you get a bill. If trailer ain’t locked people will put them in trailer
Heifers were down to $20 not long ago (we are a closed herd, so I don’t keep up there)
Steers-700 weight..... $0.63 pound. Go grow one for that on $6k acre land

All we have are the things we’ve acquired over the years. Whatever’s left when the wheels come off is what we will have. I could make more part time at McDonalds (that’s being serious). And if I had the hours in that we currently run ... I’d be in a new tax bracket

Yep.
My uncle was a cattle man for 50+ years. He ran several hundred head.. Every time I would ask him how many he was running he would always say "Just enough to go broke, bankrupt and belly up".. It always made me chuckle because I knew he was doing OK.

[PondPopper]

Cowgirls are the reason.


Cowgirls like Cowboys.

You can't be a cowboy without cows.

How dare you!!!!

[Worksalot]

Cowgirls are the reason.


Cowgirls like Cowboys.

You can't be a cowboy without cows.

I like this answer for sure. Had a pretty cowgirl come fishing with me out here. Makes things far more tolerable. Makes a guy temporarily forget all the unpleasant things.

[Aggiehunter08]

Cowgirls are the reason.


Cowgirls like Cowboys.

You can't be a cowboy without cows.

Cowboys work for cattlemen

[SmTx]

I agree this is confusing. Here is how the tax breaks help some people.

First they have to have enough money to live on and are putting money back into savings. They use the savings to buy land run cattle. Lets say they are able to put 60K back into savings every year. If they put it into savings they may have to pay 35% tax on that money that goes to the government that you never get back. So instead of having 60K in savings they actually only end up with 60k-21K=39K in savings.

Now if they spent the 60K in buying cattle or tractor they own 60k worth of cattle or a tractor etc. and don't have to give the government 21K that they will never see again. So the cattle may not be profitable per say but you are kinda hanging on to your money instead of paying tax that you will never see again.

That's done in all business to lower your overall tax bill. Not necessarily a tax break. But I get what you're saying

[Texans42]

I'll buy as many 700 weight steers as you got at $.63/lb cash

Becareful what you wish for.... you really want a bunch of blk and white steers wondering around looking for a place to die?

Only thing worse if you ran angora sheep

[100%TtId]

Plenty of volatility in beef as well:

As expected, beef packer margins jumped wildly higher the week ending Aug. 17, while cattle feeding margins slipped into the red. According to the Sterling Beef Profit Tracker, packer margins topped $358 per head last week, or $167 higher than the previous week.

Cattle feeders saw their margins decline from an average of $24 per head profit to a $28 per head loss.

https://www.drovers.com/article/profit-tracker-packer-margins-went-how-much

[Texans42]

Plenty of volatility in beef as well:

As expected, beef packer margins jumped wildly higher the week ending Aug. 17, while cattle feeding margins slipped into the red. According to the Sterling Beef Profit Tracker, packer margins topped $358 per head last week, or $167 higher than the previous week.

Cattle feeders saw their margins decline from an average of $24 per head profit to a $28 per head loss.

https://www.drovers.com/article/prof...-went-how-much

We need another mad cow scare.

Use to if corn was down cattle where up and vis versa... not so much any more

[DirtyDave]

I am still waiting for an explanation of why folks lose money for the tax breaks. Can you please explain the accounting?

It's not that difficult. Some people get a minimum amount of cows just to keep their land in ag exemption. Especially for small "Ranchette" type places. If running a small herd on your 20 acres costs you $2k per year, but it drops your taxes $5k per year. You saved $3k. (not accurate numbers, just an example)
Beats paying taxes on 20+ acres that is not in Ag ex.

Your mileage may vary.....

[Low Fence]

I'll buy as many 700 weight steers as you got at $.63/lb cash

I loose money there but that’s what they brought

Give me $1.25 a pound and tell me where you want the trailer backed up to? If you have never worked with Holstein I’ll bet a dollar to a donut a 700 would be a 600 in a short time. They will die if left to eat grass.

[Texans42]

I’ve hunted a total of 7 hours since opening day. It just happened to be the perfect times both times.

Only positive is I don’t have a “boss” to answer to. I don’t have the final say... but not a “boss”

Don’t tell all the secrets, my two biggest deer came via feed truck and a swather

[gfulton]

Big tax write off. The whole ranch, land and equipment, etc. is put in a Corp., LLC or whatever.

[Burnadell]

I agree this is confusing. Here is how the tax breaks help some people.

First they have to have enough money to live on and are putting money back into savings. They use the savings to buy land run cattle. Lets say they are able to put 60K back into savings every year. If they put it into savings they may have to pay 35% tax on that money that goes to the government that you never get back. So instead of having 60K in savings they actually only end up with 60k-21K=39K in savings.

Now if they spent the 60K in buying cattle or tractor they own 60k worth of cattle or a tractor etc. and don't have to give the government 21K that they will never see again. So the cattle may not be profitable per say but you are kinda hanging on to your money instead of paying tax that you will never see again.

Huh? If they are putting $60k into savings every year they are not losing money. I know that the 35% tax rate was hypothetical, but the actual tax rate on $60k for married couple is 15%.

Running a few head of cattle to qualify for ag exemption on land...I understand, but I don’t believe that was the question posed. My question for those who simply stated “tax benefits” is how does one get 100% tax savings from losing money raising cows? I understand accounting, but I don’t believe those who make those simple statements understand the accounting for income tax losses.