Small time farmers and ranchers buy cows & bulls for breeding purposes. These are not the large big-time farmers and ranchers with 1000's of head. Rather, these have probably 50 - 150 head of breeding stock.
I set these up to depreciate, in the year that they are purchased. The depreciation schedule is rather long because of this.
Over a period of time, usually years, the taxpayer sells someof these breeding cows and bulls. However, he has no idea when these were purchased as they weren't tagged or no records were kept on each cow or bull.
How do you determine which ones to remove from the depreciation schedule? The original cost of each varies. And, based on the selling price, there could be some capital gain income after the recapture of the depreciation taken.
When the taxpayer doesn't or can't identify when the specific purchase date, I have been using the FIFO method to remove the breeding stock from the depreciation schedule.
Is this OK? Anyone have any problems with the IRS during an audit on this?
I set these up to depreciate, in the year that they are purchased. The depreciation schedule is rather long because of this.
Over a period of time, usually years, the taxpayer sells someof these breeding cows and bulls. However, he has no idea when these were purchased as they weren't tagged or no records were kept on each cow or bull.
How do you determine which ones to remove from the depreciation schedule? The original cost of each varies. And, based on the selling price, there could be some capital gain income after the recapture of the depreciation taken.
When the taxpayer doesn't or can't identify when the specific purchase date, I have been using the FIFO method to remove the breeding stock from the depreciation schedule.
Is this OK? Anyone have any problems with the IRS during an audit on this?
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