Best of TaxLetter: Can I Depreciate My Cat?
A brochure answers a complex question to motivate tax
practitioners into buying the advertised book:
"Livestock held for work, breeding or dairy purposes may be
depreciated over its useful life subject to an allowance for
salvage value. Livestock includes chinchillas, mink, foxes and
other furbearing animals. If held for breeding (or
draft) purposes, a cat is not inventory. Therefore, assuming
the cat meets these tests, the cat will be depreciable unless
the catbreeding activity is subject to the passive loss rules,
at risk limitations, or the rules denying losses for activities
not engaged in for profit. If you sell the cat it will be
treated as Section 1231 property, and depreciation will have to
be recaptured, unless the disposition is in connection with a
divorce. To avoid recapture, it's best to contribute the
depreciated cat to charity."
(No. 71)
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