05-04-2013 11:17 AM
ET and taxes?
Thinking of having IVF done on a cow. I will pay $750 to have it done and then rather than freezing or providing my own recips and paying implant fees, I will just let the ET facility plant the embryos and pay them $2400 for each pregnant recipient at 70 days of pregnancy. I will calve the recips out and sell them either at weaning or a few months later as commercial bred cows. For federal income tax purposes I would like to expense out as much of this deal as the IRS will allow in the year the money is spent. I would think the $750 per donor fee would be an expense in the year it is paid. The crossbred recip would be worth about $1000 to $1100 if she was run through the sale barn carrying a 70 day pregnancy. The embryos the recips would carry would be from cows and bulls that I own. Would the IRS allow me to expense out the $1300 to $1400 per recip as a production expense? Does the fact I have no intent to keep the recip cow no more than 12 to 18 months play into whether she would be depreciated or expensed out? So far, the people I have talked to say depreciate out the recip cows at $2400 each. It doesn't seem to me that those recips should be valued at $2400. Anyone have any experience in dealing with the IRS on these issues? Thanks in advance. John