I have a client who purchased 30 breeding cattle in 2012 for $30,000. In setting up the depreciation, would other tax preparers set up each cow as an individual asset or group the cattle and depreciate under the General Asset Account? I am a little confused and would appreciate some clarification. Under the GAA, it states that if you sell an asset in a GAA, it is taxed as ordinary income with a zero basis and you continue with the depreciation. However, I also read that if a breeding animal is held in excess of 24 months a gain in excess of recapture of depreciation is considered capital gain. So if you put assets in a GAA do you lose the ability to have the asset taxed as a capital asset when sold? Appreciate your expertise.
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