The Business End -- Chickens and Taxes

Discussion in 'Managing Your Flock' started by Fyremelody, Feb 7, 2015.

  1. Fyremelody

    Fyremelody Out Of The Brooder

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    Hey all! There's really no category set up for something like this, so I am sticking it in "managing" because it's management to some degree.

    So I'm hoping someone here actually reports their chicken "stuff" on taxes as a business. I have some questions, based on my previous experience with reporting the horses, and some things that haven't made sense to me, but now make even less sense.

    How do you report, on the books, the acquisition of new stock and then the contrasting loss of existing stock?

    With the horses, my accountant put every horse we purchased as a depreciating asset. That's all well and good when you have animals that can depreciate over years, not perhaps months. A chicken I might pay 10.00 for, as part of a hatching egg purchase, doesn't depreciate very long at all. Is the purchase better recorded as an expense?

    On the same vein, with foals we bred here and produced here, even if we kept them with the intent of incorporating them into our breeding business, they had no depreciable value because there was no cost associated with it -- beyond vet care, which was expensed out. This seems...off...to me for some reason. If I produce a chick that is a planned layer, and those eggs will add to my profit, then that chicken has some value, and that chicken's production has value.

    Which leads me to the loss of stock. If we lost a horse, well, then it just was removed from the books. Which made no sense to me when it came to stallions that might have guaranteed bookings. If I lost a horse that was bringing in x$/mare, and suddenly that x$ was no longer in my books, or my planned profits, I've suffered a loss I would think would go somewhere.

    Same with chickens, in particular, egg layers. If I lose a hen (or two or three or lets say, God forbid, an entire flock), that is a major egg producer, then I've lost an asset.

    In horses, this could be compensated by insuring the stallion. At his demise his overall value would figure into payment for loss, presuming the loss was covered under one of the named clauses. I've seen no chicken insurance ;) Not for anything beneath corporate / grower / hatchery operations with huge numbers of birds.

    Do I, perhaps, instead of recording the chicken's purchase price, do as the insurance company did, and assign a "value" that then is my "Cost of purchase"? That sounds...fishy.

    If I were running a car lot, and I suffered hail damage, and I offload those cars at an extremely reduced price -- that extra "loss" is getting reported somewhere, right? Or does that, again, fall under insurance, not taxes?

    So what do you all do? Insight would be HIGHLY appreciated!

    Thanks!
    Claire
     
  2. donrae

    donrae Hopelessly Addicted Premium Member

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    Were I you, I would talk to an accountant or other tax professional. Never, ever take advice on something like this from random folks on the interwebz. Telling the IRS under audit "someone on BYC told me I could do this" might actually make an IRS agent crack a smile [​IMG]
     
    1 person likes this.
  3. Fyremelody

    Fyremelody Out Of The Brooder

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    May 22, 2014
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    Yes, I realize that. I have an accountant. But I would also like to hear what other poultry business people do.
     
  4. aart

    aart Chicken Juggler! Premium Member

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    There are not many 'poultry business' people on BackYardChickens......
    .......most here are in it for fun, pets or food for the family.

    Might try over at http://homesteadingtoday.com/poultry/

    or try the advanced search function here at BYC,

    this will get you started but try other keywords too:
    advanced search>titles only>business accounting
     
  5. ImNotYogi

    ImNotYogi Chillin' With My Peeps

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    As others have said, better to talk to an accountant. Or check out aart's links. Most people on here don't have chickens as a business. At least they dont sell enough to qualify as a business. Don't know about you but in NC I'd have to sell 30+ dozen eggs a week to be considered a business. No way on earth I'm getting that many hens.
     
  6. donrae

    donrae Hopelessly Addicted Premium Member

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    Oh come on, there's got to be breeds out there you really, really want....[​IMG]
     
  7. ImNotYogi

    ImNotYogi Chillin' With My Peeps

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    Lol, you're a bad influence. I shall not succumb to chicken math....
     
  8. bobbi-j

    bobbi-j Chicken Obsessed

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    She is, isn't she? I've seen her on other threads enabling other chicken addicts. [​IMG]
     
  9. donrae

    donrae Hopelessly Addicted Premium Member

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    Hey! I resemble that remark [​IMG]

    Just cause I can't buy or hatch any birds this spring, doesn't mean I can't do my little bit to keep the chicken economy going [​IMG]. I'm also submitting a reality show to Animal Planet--Chicken Intervention--and need a large pool of potential Intervention-ees to draw from.
     
  10. bobbi-j

    bobbi-j Chicken Obsessed

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    Well, it's good that you're doing your part for the chicken economy. Now I feel like such a slacker, since I'm not keeping up with you in the enabling department. I would be happy to help, though, so you can get your show started! [​IMG]
     

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