Taxpayer is a sheep farmer, previously herded sheep (pasture to barn, between pastures, etc) on his ATV. With the growth of his herd, he acquired a herding-trained border collie in
2007 (fascinating to watch the dog work!) for $1,700. Depreciation rules discuss livestock but not working dogs. I researched some old discussions in this group that mention guard dogs but not herding dogs. I'm thinking the dog would be 7-year property either as agricultural machinery or equipment, or as property not in any other class. Any experience/suggestions with herding dog depreciation?
It's not inventory to the purchaser -- why would it necessarily be inventory to the seller? More info is needed.
Living in an urban area, it is rare that I see a Schedule F. Heck, for all I know raising dogs for sale might not even be considered farming (assuming that's the source of the border collie, and not another sheep-herder).
Usually you're buying from a breeder....it's carried on the books of the seller just as livestock is. There are some that are bought to breed, and those that are born and raised, in this case trained, then sold.
Course, the trainer could be buying them from a breeder, training them and then selling them, in which case they would be inventory of sorts.
I'm not concerned with how the seller treats the transaction
- I'm helping the purchaser. My original question was posed in earnest, not tongue-in-cheek.
According to Wikipedia
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border collies are widely regarded as the most intelligent dog breed and are frequently used on farms all over the world for assisting with the handling of livestock. Quoting Wikipedia, "The use of dogs for herding sheep makes good economic sense. In a typical pasture environment each trained sheepdog will do the work that it would take about three human individuals to do if there were no dogs available." We believe the costs of acquiring, training, and maintaining the dog are ordinary and necessary farm expenses. The dog appears to meet the requirements for depreciable property outlined in Pub 946 in that:
It is tangible property owned by the taxpayer; It is used in his income producing sheep farming activity, and for no other purpose; It is expected to last more than one year.
We need help with the fourth requirement - determining its useful life. Again, according to Wikipedia, the dog has an expected life span of 12 to 15 years. It's probably fair to assume an adult working life of half that time. We propose to treat the dog as 7-year property, either as agricultural machinery or equipment, or as property not in any other class. I can't find any IRS documentation that addresses this issue. I'm hoping someone here has dealt with this before, and is willing to share the wisdom of experience.
Sorry, no direct information on working dogs. Working horses have guideline of 10 yrs, breeding cattle 7, breeding hogs/sheep 5.
Comparing useful estimated lives, I'd think the 7-year figure reasonable.
I didn't look, but I'd think there might be information available from the registered working dogs associations.
Not tax pro and not sheepherder, but do farm for primary source of income...
( Of course, Baxter Black quips the difference between farmer and rancher is that the rancher pretends his dog is a worker, the farmer knows he's a pet... :) And if you don't know who Baxter Black is, that won't mean a thing, granted... )
Absent any thing specific I would treat the working dog tax wise the same way that a ranch might treat a working horse (assuming that the IRS has a rule for horses) or a dairy farm might treat a cow.
In addition to previous, check w/ your local Ag Extension office--if this is in an area of significant farming/ranching they should have some experience. Failing that, the State land grant university should also be of some help.
I canna believe how easy it was to get off topic and so quickly, too. Nobody really answered the question.
A working dog, like a working machine, is 7 years MACRS.
And they are beautiful to watch when they are working. Some years ago on one of our many trips to Scotland we had traveled up this valley and when the road ran out, was returning down to the main road when suddenly we were stymied because the local farmer was bringing his sheep back home that night. The three collies were a joy to watch as they knew exactly how to herd the sheep and keep them focused on the way home. Of course that was what's known as the 5 O'clock highland traffic jamb, and we patiently followed behind them.
BTW, the second word beginning my response is Scottish for "can not". And it's happy hour here in Dixie, and I'll drink that that!
Thanks to all that responded, and to you, Harlan, for your decisive answer and your eloquent comments. Were going with the 7 years MACRS, though it's hard to reduce this dog to numbers on paper after seeing him at work in the fields.
Paul T (newly settled in Geneva County, AL from just across the state line in FL.)
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