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Posted by Paul Thomas, CPA on March 19, 2008, 9:55 am
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> It's not inventory to the purchaser -- why would it necessarily be
> inventory to the seller? More info is needed.
>
> Living in an urban area, it is rare that I see a Schedule F. Heck, for
> all I know raising dogs for sale might not even be considered farming
> (assuming that's the source of the border collie, and not another
> sheep-herder).
Usually you're buying from a breeder....it's carried on the books of the
seller just as livestock is. There are some that are bought to breed, and
those that are born and raised, in this case trained, then sold.
Course, the trainer could be buying them from a breeder, training them and
then selling them, in which case they would be inventory of sorts.
--
Paul A. Thomas, CPA
Athens, Georgia
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Posted by Paultry on March 19, 2008, 10:52 am
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Mark Bole wrote:
> D. Stussy wrote:
> [...]
>>>
>>> Did the seller of the "herding-trained border collie" report gain on
>>> sale of business asset?
>>
>> I hope not. Working animals are usually inventory by those who breed
>> them.
>>
>
> It's not inventory to the purchaser -- why would it necessarily be
> inventory to the seller? More info is needed.
>
> Living in an urban area, it is rare that I see a Schedule F. Heck, for
> all I know raising dogs for sale might not even be considered farming
> (assuming that's the source of the border collie, and not another
> sheep-herder).
>
> -Mark Bole
>
I'm not concerned with how the seller treats the transaction
- I'm helping the purchaser. My original question was posed
in earnest, not tongue-in-cheek.
According to Wikipedia
(http://en.wikipedia.org/wiki/Border_Collie), border collies
are widely regarded as the most intelligent dog breed and
are frequently used on farms all over the world for
assisting with the handling of livestock. Quoting
Wikipedia, "The use of dogs for herding sheep makes good
economic sense. In a typical pasture environment each
trained sheepdog will do the work that it would take about
three human individuals to do if there were no dogs available."
We believe the costs of acquiring, training, and maintaining
the dog are ordinary and necessary farm expenses.
The dog appears to meet the requirements for depreciable
property outlined in Pub 946 in that:
It is tangible property owned by the taxpayer;
It is used in his income producing sheep farming activity,
and for no other purpose;
It is expected to last more than one year.
We need help with the fourth requirement - determining its
useful life. Again, according to Wikipedia, the dog has an
expected life span of 12 to 15 years. It's probably fair to
assume an adult working life of half that time. We propose
to treat the dog as 7-year property, either as agricultural
machinery or equipment, or as property not in any other
class. I can't find any IRS documentation that addresses
this issue. I'm hoping someone here has dealt with this
before, and is willing to share the wisdom of experience.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by dpb on March 19, 2008, 1:18 pm
Please log in for more thread options Paultry wrote:
...
> It is tangible property owned by the taxpayer;
> It is used in his income producing sheep farming activity, and for no
> other purpose;
> It is expected to last more than one year.
>
> We need help with the fourth requirement - determining its useful
> life. Again, according to Wikipedia, the dog has an expected life span
> of 12 to 15 years. It's probably fair to assume an adult working life
> of half that time. We propose to treat the dog as 7-year property,
> either as agricultural machinery or equipment, or as property not in any
> other class. I can't find any IRS documentation that addresses this
> issue. I'm hoping someone here has dealt with this before, and is
> willing to share the wisdom of experience.
Sorry, no direct information on working dogs. Working horses have
guideline of 10 yrs, breeding cattle 7, breeding hogs/sheep 5.
Comparing useful estimated lives, I'd think the 7-year figure reasonable.
I didn't look, but I'd think there might be information available from
the registered working dogs associations.
Not tax pro and not sheepherder, but do farm for primary source of income...
( Of course, Baxter Black quips the difference between farmer and
rancher is that the rancher pretends his dog is a worker, the farmer
knows he's a pet... :) And if you don't know who Baxter Black is, that
won't mean a thing, granted... <vbg> )
--
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Avrum Lapin on March 19, 2008, 1:19 pm
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> Mark Bole wrote:
> > D. Stussy wrote:
> > [...]
> >>>
> >>> Did the seller of the "herding-trained border collie" report gain on
> >>> sale of business asset?
> >>
> >> I hope not. Working animals are usually inventory by those who breed
> >> them.
> >>
> >
> > It's not inventory to the purchaser -- why would it necessarily be
> > inventory to the seller? More info is needed.
> >
> > Living in an urban area, it is rare that I see a Schedule F. Heck, for
> > all I know raising dogs for sale might not even be considered farming
> > (assuming that's the source of the border collie, and not another
> > sheep-herder).
> >
> > -Mark Bole
> >
>
> I'm not concerned with how the seller treats the transaction
> - I'm helping the purchaser. My original question was posed
> in earnest, not tongue-in-cheek.
>
A big snip
Absent any thing specific I would treat the working dog tax wise the
same way that a ranch might treat a working horse (assuming that the IRS
has a rule for horses) or a dairy farm might treat a cow.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by dpb on March 19, 2008, 1:52 pm
Please log in for more thread options Paultry wrote:
...
> We need help with the fourth requirement - determining its useful
> life. ...
In addition to previous, check w/ your local Ag Extension office--if
this is in an area of significant farming/ranching they should have some
experience. Failing that, the State land grant university should also
be of some help.
--
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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