Why do people have cattle if its so unprofitable?

[jnd1959]

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

I tell clients, no one ever made money losing money for tax breaks. The best you can do is improve the value of the land or get a discount on assets you would have purchased anyway. You can defer taxes and lower the tax rate when you ultimately pay it but you can't make money taking losses for tax purposes.

25,000 per acre is development prices. His ultimate plan is to sell for development or develop himself. My opinion.

[Texans42]

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

Every bodies definition of living is different, 27kish is basically poverty bar. So you cant net/make 27k off 140 head on free land?

[curtintex]

I've learned a few things from this thread....

1. Many of you have never read a P&L or Balance Sheet.
2. Many of you have never run a business.
3. Many of you have never owned more than a few cows.
4. Some of you are probably going to prison.

[Abcdj]

I've learned a few things from this thread....

1. Many of you have never read a P&L or Balance Sheet.
2. Many of you have never run a business.
3. Many of you have never owned more than a few cows.
4. Some of you are probably going to prison.

#4...LMAO..... I was gonna claim BULLBUTTER on this thread all together.

[lostbrd]

Love me some Corb!

[Texans42]

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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But that’s kind of my point, you are re-investing some in necessity but majority in convenience. Investing in convenience is not making you money or saving you money.

I could run my farm at a loss by chasing depreciating assets but that’s dumb, I’d be better off just leasing it out on a yearly contract to Sponge Bob square pants, make more money, with less risk.

[doghouse]

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.

[Worksalot]

I've learned a few things from this thread....

1. Many of you have never read a P&L or Balance Sheet.
2. Many of you have never run a business.
3. Many of you have never owned more than a few cows.
4. Some of you are probably going to prison.

Brings a saying to mind that a friend in the cutting horse business said:

Never marry someone until you’ve worked cattle with them first.

[Burnadell]

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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So they have been losing money for 20 years on 8 figure revenues? How are they staying in business?

Again, losing money is different from “showing” a taxable loss. It’s all about the cash flow, not taxable losses. If one can “make money” (positive cash flow) while showing tax losses, that is good, no great! We are getting tied up with semantics and some are talking about property tax exemptions rather than positive cash flows raising cattle.

I believe I said they will require an intention to make a profit by reviewing P&L's and business plans. You don't know it but I was a commercial bank lender for 12 years before getting into bank management for another 12 years. My info may be dated, but I know the IRS will not let people take losses for running a few head of cattle for infinity. The key is IF they audit the cattle bidness, the bidness will need to prove they are raising cattle with the intention of turning a profit.

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a-hobby/L5NClTTtK

[jnd1959]

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.

[Burnadell]

I've learned a few things from this thread....

1. Many of you have never read a P&L or Balance Sheet.
2. Many of you have never run a business.
3. Many of you have never owned more than a few cows.
4. Some of you are probably going to prison.

That's is exactly what I gleaned from some of the responses!

[jnd1959]

So they have been losing money for 20 years on 8 figure revenues? How are they staying in business?

Again, losing money is different from “showing” a taxable loss. It’s all about the cash flow, not taxable losses. If one can “make money” (positive cash flow) while showing tax losses, that is good, no great! We are getting tied up with semantics and some are talking about property tax exemptions rather than positive cash flows raising cattle.

I believe I said they will require an intention to make a profit by reviewing P&L's and business plans. You don't know it but I was a commercial bank lender for 24 years before getting into bank management. My info may be dated, but I know the IRS will not let people take losses for running a few head of cattle for infinity. The key is IF they audit the cattle bidness, the bidness will need to prove they are raising cattle with the intention of turning a profit.

https://turbotax.intuit.com/tax-tips...obby/L5NClTTtK

I forget the court case but "profit" can also be improvement to the value of assets. Even so, your right, negative cash flow won't make money. It can get some assets at a discount. Whether that breaks even or not depends on the numbers.

[Texans42]

The truth is, ranchers aren't in the cattle business, there 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.

90% of it, other 10% is being as efficient with outflows as possible.

New fences are a product of oil money not cattle money. Cattle money is patch it.

[Burnadell]

I forget the court case but "profit" can also be improvement to the value of assets. Even so, your right, negative cash flow won't make money. It can get some assets at a discount. Whether that breaks even or not depends on the numbers.

My whole long-winded point is that some of the flippant answers that tax breaks and tax benefits are why people are willing to raise cattle at a loss indicate that they really do not understand the numbers.

Do I get the idea that you are a CPA?

[doghouse]

^^^^ This is actually the truth. I grow grass for the cattle to graze. Cattle are a by product of growing grass! LOL!!!