Why do people have cattle if its so unprofitable?

[Burnadell]

Sure it is easy to do

You can show a “tax loss” and still have a positive “cash flow”, but the OP was referring to losing real money/cash flow. Please explain your statement on how it is easy to do for the benefit of those who want to know.

[M16]

What are you? The Tax Police?
Just what we need is the Gov taxing something else.
Were you that kid in school nobody liked because you tattled on everyone?

They already tax money made on cattle.

No, they didn’t like me because I beat the hell out of them.

[JTCowpoke]

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.

The 60K I was referring to was the amount and individual would have after paying all there other expenses. If a married couple made grossed $460K per year and was able to put 60K of that into savings the total of that 60K would be taxed at 35%. I doubt that if a married couple made 60K per year that they would be able to put much of anything into savings.

[Throwin Darts]

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

I have real world experience here.

Option 1: Buy some land and spend a bunch of money on it.

Option 2: Buy some land and spend a bunch of money on it. Put some cattle on it and some of that bunch of money that you've been spending comes back to you come tax time. Tax benefit outweighs money spent on cattle. Win.

[Philip-TX]

But that "bunch a money" don't come from the cattle right?

[RiverRat1]

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?

I live on 15 acres. My BIL cuts hay on my place to feed his cows (that he is obviously losing his ***** on). I dont lift a finger and my place stays under Ag exemption and lowers my taxes tremendously. So you dont have to have cattle to get a lower tax rate.

I'm with Burnadell on this one.......I cant ever get my BIL or any other buddies I have that run cattle to explain the "tax breaks" or "write offs" or all the other tax stuff they say saves them money.

It can save some people money. It's just not easy and doesn't save near what most people think it does or would.

People have this mindset that Ag ranches are all tax exempt to the Nth degree...And it's this mysterious tax free setting that makes them save tons of money. But they don't understand that in order to write something off you still had to buy that something. Take the 70k truck earlier in the thread. Sure they can write 70k off, but they have to make 70k somewhere or the write off does nothing. And they still paid 70k for the truck.

Now what some people do is run a few cattle along side their regular income. Buy all their toys and claim them as Ag and make those write offs go against the money made from their regular income. All they are doing is paying less income etc tax.. But they still have to spend the money so it's still a stupid move MOST of the time.

[RiverRat1]

I have real world experience here.

Option 1: Buy some land and spend a bunch of money on it.

Option 2: Buy some land and spend a bunch of money on it. Put some cattle on it and some of that bunch of money that you've been spending comes back to you come tax time. Tax benefit outweighs money spent on cattle. Win.

You are correct. But it's complicated just enough where most would screw it all up

[Ramball36]

I think a lot of guys just like to buy toys and write them off under ag exemption. That new ranger with the lift, 12 light bars and a high rack goes down as “feed buggy”.

[Throwin Darts]

But that "bunch a money" don't come from the cattle right?

Yes of course. No way all those panels from Tractor Supply are going around deer feeders.

[Texans42]

I have real world experience here.

Option 1: Buy some land and spend a bunch of money on it.

Option 2: Buy some land and spend a bunch of money on it. Put some cattle on it and some of that bunch of money that you've been spending comes back to you come tax time. Tax benefit outweighs money spent on cattle. Win.

You are now talking about investing into a recreational ranch with a few cattle, not living off farming and cattle. Big difference

[Throwin Darts]

You are now talking about investing into a recreational ranch with a few cattle, not living off farming and cattle. Big difference

This thread is called "Why do people have cattle if its so unprofitable". I just gave you the answer.

Its not called "Why do people that live off farming and cattle have cattle".

[Tx_Wader]

We got out of the cattle business years ago and leased my property to a cattleman who now deals with it and a few head of our own cattle. He makes money on the cattle, pays me a good amount for his lease and we have a very good relationship.

He also has a full time job and deals with the cattle when he's off, he and his son do.

[Texans42]

This thread is called "Why do people have cattle if its so unprofitable". I just gave you the answer.

Its not called "Why do people that live off farming and cattle have cattle".

Lol, Good point.

[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.

[DeadEyeB]

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.....

still makes no sense since you don't need an Ag exemption.

If you have that ag exemption all you do is transfer it to a wildlife exemption. It's very easy if you already have the ag.

Losing cattle operation on a hunting ranch is a waste of time and money.