Why do people have cattle if its so unprofitable?

[jds247]

You just tried to tell me I couldn’t make 27k off 150head, because you had to feed all winter, and plus you have to wait until they are paid for to claim a check. I’ve run up to 300 momma cows and up to 1000 yearlings a year, in the panhandle with a tenth of the rain fall you get and I don’t have to feed 1200 bales a winter. Only thing that I sell on the gain is yearlings and canners.

It absolutely does not take 4 calves to pay for a cow, a live mobile cow always has canner value at the very least. You are off by 3-3.5 calves. You just have to cover expenses and depreciated value

Good luck to you.

You know what I'm not arguing with you.. I hope you become a millionaire off cows..

[Texans42]

You know what I'm not arguing with you.. I hope you become a millionaire off cows..

Thanks, I hope you do the same.

[TexOddball]

.

[Atfulldraw]

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?

I sure hope so!

I'm thinking about getting in the cattle business just to offset some of my huge bitcoin trading income and my pig rental business.

I still don't understand who is my PAL, and furthermore whether having hobby horses is still classified as a business.

More furtherer, the government said something about carrying some of my losses around and maybe getting suspended.

Am I in trouble?

[ramrod]

BrianL explained it the best in post 134.

[DeadEyeB]

BrianL explained it the best in post 134.

no he doesn't. He suggest people play a dangerous game with a hobby and the IRS.

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.marketwatch.com/story/you-cant-deduct-hobby-related-expenses-under-the-new-tax-lawbut-dont-give-up-hope-2018-05-14

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

running a losing cattle operation for the meager tax breaks is a pointless game of chicken with the law.

[ramrod]

no he doesn't. He suggest people play a dangerous game with a hobby and the IRS.

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.marketwatch.com/story/you-cant-deduct-hobby-related-expenses-under-the-new-tax-lawbut-dont-give-up-hope-2018-05-14

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

running a losing cattle operation for the meager tax breaks is a pointless game of chicken with the law.

I simply stated he explained the situation well. Just because its a game you don't want to play, doesn't make it wrong. Thats for the tax man and the CPA to figure out.

[Burnadell]

I sure hope so!

I'm thinking about getting in the cattle business just to offset some of my huge bitcoin trading income and my pig rental business.

I still don't understand who is my PAL, and furthermore whether having hobby horses is still classified as a business.

More furtherer, the government said something about carrying some of my losses around and maybe getting suspended.

Am I in trouble?

Exactly!

BrianL explained it the best in post 134.

no he doesn't. He suggest people play a dangerous game with a hobby and the IRS.

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.marketwatch.com/story/you-cant-deduct-hobby-related-expenses-under-the-new-tax-lawbut-dont-give-up-hope-2018-05-14

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

running a losing cattle operation for the meager tax breaks is a pointless game of chicken with the law.

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:

"When the IRS Classifies Your Business as a Hobby
Updated for Tax Year 2019

OVERVIEW

If your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit motive if you want to claim those deductions.


The Internal Revenue Service allows you to take a tax deduction for legitimate losses incurred in the operation of your business. However, if your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit motive if you want to claim those deductions.

Earning a profit

The IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:

Do you put in the necessary time and effort to turn a profit?
Have you made a profit in this activity in the past, or can you expect to make one in the future?
Do you have the necessary knowledge to succeed in this field?
Do you depend on income from this activity?
Are your losses beyond your control?
Practical standard for business classification

The general rule is that if you have not turned a profit in at least three of the prior five years, the IRS will categorize your business as a hobby. This may be extended to a profit in two of the prior seven years in the specific case of horse training, breeding or racing. This is, presumably, because these endeavors involve a great amount of risk.

Consequences of hobby classification

Generally, the IRS classifies your business as a hobby, it won't allow you to take any losses. However, in certain limited situations you can use your hobby expenses to reduce your taxes.

If you have a hobby loss expense that you could otherwise claim as a personal expense, such as the home mortgage deduction, you can claim those expenses in full.

For tax years prior to 2018, other expenses, such as advertising, wages, insurance premiums, depreciation or amortization, may also be usable as a miscellaneous itemized deduction subject to 2 percent of your adjusted gross income. However, you must have earned more total income in your hobby than the amount of all of these deductions, including your personal deductions. In that scenario, it's likely the IRS would categorize your hobby as a business anyway.

Beginning in 2018, miscellaneous itemized deductions are no longer deductible and therefore no hobby expense is able to reduce hobby income.

Preventing your business from being classified as a hobby

Running a hobby as a business could very possibly trigger an IRS audit. If your business is legitimate, keeping accurate and extensive records could help prevent the classification of your business as a hobby.

In addition to demonstrating your professional approach to your business, records and receipts can help document your profit motive. A written business plan is often a prerequisite for indicating an intent for profit, and it can also show ways in which you are modifying your business to cope with losses."

[Farmdog]

I have great replacement heifers in Mercedes for sale! Instant cattle operation with the most spoiled brat calves you’ve ever seen! Come load up! Just a little off topic! Carry on!

[Atfulldraw]

Exactly!

I knew you would know....because, you know....you know!

I have great replacement heifers in Mercedes for sale! Instant cattle operation with the most spoiled brat calves you’ve ever seen! Come load up! Just a little off topic! Carry on!

i only have one question....

[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 love your consistent strategy of playing dumb while waiting to unleash your thoughts later on in the thread.

[Burnadell]

I love your consistent strategy of playing dumb while waiting to unleash your thoughts later on in the thread.

Well...uh, I guess so. I don't think I was playing dumb. If someone posts an answer without an explanation, I am curious to know if I might learn something with more explanation...I think. .

One of my many faults is getting bummed when someone legitimately poses a question; then others throw out either incorrect or incomplete one or two-word answers with no explanation, then they disappear. It can further confuse the issue for those who really want to know.

[Radar]

I simply stated he explained the situation well. Just because its a game you don't want to play, doesn't make it wrong. Thats for the tax man and the CPA to figure out.

The tax man and CPA aint gonna bail you out when it comes to paying fines and back taxes.

I do not think its a game, more like a bet and some say the house always wins in the end.

[Radar]

Well...uh, I guess so. I don't think I was playing dumb. If someone posts an answer without an explanation, I am curious to know if I might learn something with more explanation...I think. .

One of my many faults is getting bummed when someone legitimately poses a question; then others throw out either incorrect or incomplete one or two-word answers with no explanation, then they disappear. It can further confuse the issue for those who really want to know.

Yes sir.

[BertramBass]

I thought Trump changed it to where you could write off the initial expense and raised the maximum amount.