Loss on livestock investment

[Sudhir]

My client invested 25K with a farmer for 23 cows with the understanding of increasing the herd and sharing the profit on the sale of the herd. In four years the herd increased to 77. However, the cows were sold at an auction by the farmer without the knowledge of my client. The State got wind of the auction and garnished the proceeds for back taxes owed by the farmer leaving my client with a loss of his investment. Is there a way to salvage the loss on his tax return or is it a lost cause.

Thank you.

[ATSMAN]

What sort of paperwork did your client have with the farmer? Did he retain any ownership of the cows purchased with the 25K? If yes and the other farmer sold it without his permission, that is theft?

At best it would be an investment loss, subject to the $3K maximum deduction a year.

[Sudhir]

Thank you Atsman. Appreciate your reply.