I agree with you, JD, but what bothers me is what Dave brought up- Form 4797 says "Depreciation allowed or allowable"- so I think you're stuck, if you characterize it as "business property". You could call it "investment property", but then I don't think you get capital gains on the gain. What gripes me is that "depreciation" is supposed to reflect the decrease in value of business property as it wears out. That works with machinery, but I bought the real estate in a short sale, for less than its FMV at the time, and I knew I'd make money on it when I sold 10 or 15 years later. So why depreciate it? Its almost like an IRS trick to dribble out the deprecation tax break a little at a time, then sock you with recapturing the whole thing when you sell, and bumping you into a higher bracket. Grrrrrr. . .
With cows, I think you can just ignore the depreciation altogether, and just account for them on Schedule F (sale of purchased livestock). But you won't get capital gains treatment on them that way. But I think it would be rare to buy a brood cow, depreciate her out over 5 years, and have much of a recapture, much less a capital gain.
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Today's Featured Article - Field Modifications (Sins of the Farmer) - by Staff. Picture a new Chevrolet driving down the street without it's grill, right fender and trunk lid. Imagine a crude hole made in the hood to accommodate a new taller air cleaner, the fender wells cut away to make way for larger tires, and half of a sliding glass door used to replace the windshield. Top that off with an old set of '36 Ford headlight shells bolted to the hood. Pretty unlikely for a car... but for a tractor, this is pretty normal. It seems that more often than not they a
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