Reptile & Amphibian Forums

Well I filed an extension this year and I'm finally getting around to doing them. Starting last year I began breeding balls full time and I'd like to know how everyone depreciates their new snake purchases.

Do you consider it inventory or just depreciate it?

I've also been told by more than one breeder that they immediate write off the entire purchase of any animals they buy under a livestock rule but I cannot find it.

Thanks for any help or insight anyone may have.

I'm no expert but this is what my tax guy told me, if I understand him correctly:

1) New snake purchases cannot be written off if they are breeding stock, because they are an asset to your business, not an expense (same with livestock according to my guy and we live in Ohio where there are LOTS OF COWS). So, buying a male platty or buying ten dairy cows is like buying a chunk of real estate - not a deductible business expense, just asset aquisition.

2) Snake purchases can be written off if you are just turning them over and selling them. I buy 5K in imported balls and turn them around and sell them for 7K - the 5k is deductible and you claim the 7K as income. This same concept goes for any equipment purchase (racks, etc.), unless you are replacing old/damaged equipment and then it is an expense and can be fully deducted.

3) Suppose I buy a mojave for 10K - I can't deduct that. However, if in three years I sell it for 5K I can deduct the difference between my purchase price and my sale price (the "depreciation". If the animal dies I can deduct the value of an animal I pruchased because I lost the asset.

4) If I trade animals instead of selling mine then paying cash for new purchases, I benefit because I don't have to pay income tax on the sale of my snakes. (I'm just trading even one asset for another and no $ is changing hands).

Again, this is just my understanding based on a few lenghty conversations with my tax guy - don't take this as gospel!

Christy

In considering depreciation, if you go that route, remember, baby snakes appreciate not depreciate - if I buy a ghost girl this year for 2K in a year it's going to be worth three or four thousand. At some point your males will depreciate (adult pastel worth 3k two years ago would be worth 2K now), but that's not the case with babies or females.