Depreciable life of a bee

[sdtaxman]

Does anyone know the depreciable life of a bee? The expected life is less that a year so I would think you expense as a supply and not a depreciable asset but I recently obtained a new client that has a lot of bees on the depreciation schedule. I almost think that in applying the new repair regs, they would be less than $200 as a supply and certainly less than $500 so directly expensed on the tax return. My concern is to now start deducting under supplies and extra $175,000 for bees and bee boxes as the per unit cost is less that $50 in each situation, I don't feel like dealing with an audit. If any one has advise on bee keeper returns I would be grateful.

Thanks

[DaveO]

I posted this question a while back and got no takers. FWIW this is what I have done. Bee boxes were treated as 7 year property. I considered 10 year as a single purpose Ag structure but since they are mobile I went for 7. I listed the bees and queens separate and both for 5 years and then took section 179. The main reason was so that the supplies on the return wasn't a crazy big number. If you don't take 179 you can deduct the balance when the bees are replaced due to a hive collapse. The acid and sugar are supplies. If they hire out extraction and filtering be sure to check if a 1099 needs to be issued.

[taxea]

I would check the IRS publications. It seems to me that the bees would be similar to livestock.

[Roberts]

Bees are expenses, not depreciating assets.
The equipment like the hive itself is a depreciating asset.

Unless you plan on reselling the bees (really?), they aren't livestock.

[Roland Slugg]

I have no first-hand experience with this and could find nothing in the IRC regarding bees. IRS Pub 225 doesn't mention bees either, although the references to a fish hatchery or egg-laying chickens are fairly similar. With little authoritative information on point to rely on, I will offer my opinion and suggestions.

The rules for farmers apply to taxpayers in the business of raising bees for sale or for the production of honey. However, if someone keeps beehives for rent to farmers, then I don't believe the farming rules would apply. Instead, such an activity should be treated as rental of personal property.

If the client raises bees for resale, they are inventory and should be accounted for accordingly unless the T/P elects to expense his inventory, as is allowed for some farmers. If he maintains the bees for the production of honey, the bees can be expensed just like seeds. The honey would be the "crop."

Having said this, if the T/P has been depreciating his bees ... whether correctly or incorrectly ... he has adopted a method of accounting for them. In that case he can not change that method of accounting without IRS consent. If the amount involved is large, it may be worthwhile to seek that consent, and I would rate his chances as fairly good that it would be granted.

Finally, if the T/P has been treating the bees as a depreciable asset, he should assign them a very short useful life ... there is no MACRS life assigned for bees ... and make an effort each year to remove the "lost" bees by reporting them as disposed of on F-4797. A quick Google search informed me that queen honey-bees live about 3~4 years, but workers and drones live less than one year. Depreciating the queens might be a reasonable option, but depreciating the others would certainly not.

[Golden Rocket]

Depreciate the "Herd"

Ridiculous any discussion about depreciating a single bee.

If the beekeeper issued a sum of money of a several hundred bees (call this a "group" or a herd or a school or a coven, doesn' matter),
I do think he would depreciate this similar to any other such "group" of livestock.

I take five years for cattle, and carry a vintage for another group if he spends more money later. If he disposes of a portion of the herd,
I prorate the vintage and report it on a 4797. Cattle don't live forever - productive life might be around 10 years, then they go to the
glue factory.

[TXEA]

I don't know the answer to the question, but I have enjoyed the discussion. Never even thought about depreciating a bee. I guess if each bee was itemized on a bill, then the de minimis safe harbor could apply.

[sdtaxman]

I think one of the important issues here is the fact that items like bee boxes (cost $50) , cattle fence panels (cost 150-300), a bred ewe (cost 150) that would have been classified as fixed assets in the past, especially if purchased in bulk amounts to total $5000+, are now eligible to be written off under supplies or repair items. That brings up the idea of a farmer building a new feedlot fence but each fence panel is $150, if it takes $7000 of panels to complete that feedlot is that a depreciable asset, under the new regulations I would say no but I felt under the old rules I would have set it up on 7 year life as fixed asset. What about the security fence that goes around a warehouse storage facility that cost $12500 but each component was less that $200, supplies or capital asset?