Reptile & Amphibian Forums

For those of you who have your snake endeavors set up as a business, how do you account for and valuate your breeding stock? I'm currently approaching the situation and just need some experienced advice. Over how many years do you depreciate your breeding stock? It just doesn't seem as cut and dry as say a cattle rancher might handle it- snake husbandry is too...'exotic'.

thanks in advance!

Kassandra Royer

I don't think you have to go in depth into this. Break it down just like every other business...you can take a cattle rancher and use the basic principles they use.
All you have that is different is the type of product. Your arguement is that since I have a retail reptile store that I have to go about it in a different way than a stationary store.
In reality it is about the same, other than a revolving cost for feeding the animals, a cost in cleaning them, and an income from them reproducing...that is really the only difference.
TOM
Zoological Supply

If you buy snakes and turn around and sell them, then yes, it is like a stationary store. You are maintaining an inventory.

However, if you buy a bull for say $10,000, the IRS does not consider that an expense that can be depreciated in the first year (written off). You must depreciate the value of the animal over an acceptable number of years. If you paid 10K to breed your cows to someone else's bull- that is deductible in the year it occurred.

I appreciate you answering the post, though. I'm not saying you are wrong.

I'm curious to hear from people who are doing this-over how many years do you depreciate your stock?
Do you maintain young stock as "inventory" and do a switch over at a certain age?
Can you realistically depreciate them over one or two years because of the high risk of mortality, infertility, or probability of reproducing?
For males, I can definitely see this being true- they either breed in the first 12 months or they drastically lose real value anyways.
Also, how would you address a rise in value over purchase price from size gain or market fluctuation?

thanks,

Kassandra
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Kassandra Royer
Royer Reptiles

>>
>>I'm curious to hear from people who are doing this-over how many years do you depreciate your stock?
>>Do you maintain young stock as "inventory" and do a switch over at a certain age?
>>Can you realistically depreciate them over one or two years because of the high risk of mortality, infertility, or probability of reproducing?
>>For males, I can definitely see this being true- they either breed in the first 12 months or they drastically lose real value anyways.
>>Also, how would you address a rise in value over purchase price from size gain or market fluctuation?
>>

You may find http://www.cals.ncsu.edu/agexed/sae/deprec.htm interesting. Lord knows where you would find an approved depreciation time for snakes.

I'm not an accountant, but believe only your purchase price can be depreciated. The fact that the actual value of the asset may increase or decrease does not figure in until the asset is disposed of, at which time you may have a capital gain or loss based on the sale price minus the un-depreciated capital value. If the animal were to to die, the sale price is zero.

deg

When I worked out of my house, my accountant gave me a method for depreciation of breedstock:

How long is the species/specimen commercially viable?

Leopard gecko? 8 years

Bearded Dragon? 3 years

Ok, then depreciate that species over that many years. If you sell it then we'll close out that schedule.

Ball Python? 30 years? More? I doubt the IRS will require a 30 year depreciation.

Personally, my animals are a hobby so I am told I get to expense my animals against my sales. Hobby cannot have a loss but they can have profits that require taxes paid.
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AMAZON REPTILE CENTER

NAMED BEST REPTILE STORE IN LOS ANGELES

Thanks! Accountants around here go "you raise what?" and tell me to follow the rancher's books, but I just needed to know if there was an acceptable schedule to depreciate. Ball Pythons may LIVE 30 or more years, but has anyone produced from a ball python for 30 years? I doubt it. We've barely just begun to get them to breed with consistency...

That's where the trouble lies, past precedent. I guess I will have to document my basis for the schedule I choose. For example, a leopard gecko may easily live 8 years, but a female is considered old at 4 years. The same concept is mirrored in the sheep/goat schedule that is established. They are depreciated over 5 years. I know that a ewe can produce into her teens, but most commercial operations replace ewes before they turn 6 or 7.

The other factor is that there is a high risk of mortality, infertility, failure to reproduce that is not equalled in traditional livestock. I guess someone who raises alpaca or ostrich might have some insight there. While young breeding horses are depreciated over 7 years or more, racing horses are depreciated over just 3, because the risk is higher, and most horses don't race past age 3 or 4 for one reason or another.

thanks for the discussion, much appreciated.

Kassandra

>>When I worked out of my house, my accountant gave me a method for depreciation of breedstock:
>>
>>How long is the species/specimen commercially viable?
>>
>>Leopard gecko? 8 years
>>
>>Bearded Dragon? 3 years
>>
>>Ok, then depreciate that species over that many years. If you sell it then we'll close out that schedule.
>>
>>Ball Python? 30 years? More? I doubt the IRS will require a 30 year depreciation.
>>
>>Personally, my animals are a hobby so I am told I get to expense my animals against my sales. Hobby cannot have a loss but they can have profits that require taxes paid.
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>>AMAZON REPTILE CENTER
>>
>>NAMED BEST REPTILE STORE IN LOS ANGELES
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Kassandra Royer
Royer Reptiles

For example, a leopard gecko may easily live 8 years, but a female is considered old at 4 years.

They live for twenty years. They are commercially viable, producing enough eggs to be worth keeping, for eight years. Your four years may be the effect of needing to "keep current" on what is hot and reaplacing "old" stock.
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AMAZON REPTILE CENTER

NAMED BEST REPTILE STORE IN LOS ANGELES

Just an interesting bit of info....

I am not sure of the oldest know breeding female or male ball python, but there is a rubber boa that has produced babies after 50-60 years.

Just interesting....
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Chris Smith
Contact
Captive Bred Herps

A truck can last 20 years or better, but they are not depreciated over that long a period of time. Depriation can help you save money in taxes, and it's generally a benefit to depreciate at a faster rate.

>>Just an interesting bit of info....
>>
>> I am not sure of the oldest know breeding female or male ball python, but there is a rubber boa that has produced babies after 50-60 years.
>>
>>Just interesting....
>>-----
>>Chris Smith
>>Contact
>>Captive Bred Herps
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Kassandra Royer
Royer Reptiles

You do depriciate them on the same scale as you would other livestock, like cattle. My accountant deals primarily with ag related business and my animals are depriciated over a 3 year period.

Find a good accountant, it may cost more it is much better to have someone that is familiar with all of the rules.

Hope this helps-
Nick

I am an accountant, and also into ball pythons, so here is how I do it....If the "asset", which is what a morph would be, you may be able to depreciate it all in one year, which if you are in a situation where you won't get any thing back or have to pay, may help. I haven't used this with the Balls, but I did when we had another business. Otherwise you have to set a depreciation schedule - I use 5 years for females and 7 for males (they can breed earlier and more than once per season). My CPA that I have double check everything went over this with me, and after explaining the way they work, we pulled out the trusty "tax bible" and set the 5 & 7 year schedule - And actually, after several calls - as far as a comparision, cattle actually was the closest! Hope this helps!

Exactly the info I was looking for! I'll pass it along to the accountant I'm working with now.

thanks again,

Kassandra
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Kassandra Royer
Royer Reptiles

n/p
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Kassandra Royer
Royer Reptiles

I would have to check with my CPA but if I remember correctly I write off the animals over a 5 year period and the equiptment (cages, etc) is over a 7 year period... Hope that helps you. Anthony McCain-McCain's Reptiles.

My acountant, who deals with another person who is a breeder, says 5 years is the norm, even if you're talking about raising a hatchling. And if the venture loses money, you can onluy take a los if it does 2 out of 5 years. Ohterwise it's a hobby.

A 55-60 year old boa?????? I thought the max longevity was a 48 year old ball python in one of the NY zoos.
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