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We are farmers and have retired. We have sold all our sheep…

Customer Question
We are farmers and...

We are farmers and have retired. We have sold all our sheep and our query is are we taxed at the same rate for these sales as when we operated as a viable business selling surplus sheep to allow for the younger stock coming on.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

We were of the impression when selling stock on retirement our tax rate would be less.

Submitted: 5 months ago.Category: Tax
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Answered in 1 hour by:
11/20/2017
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 5 months ago
Shan-Nel Simmons
Shan-Nel Simmons, Enrolled Agent
Category: Tax
Satisfied Customers: 43
Experience: Tax Pro and Founder at Nel's Tax Help,LLC
Verified

Livestock is usually inventory. Inventory is always taxed at the ordinary rate.

In order to get lower rates you have to have capital assets. Livestock is not a capital asset. Any gains or losses from the sell of livestock will be reported on schedule F or Form 4797.

This is from the IRS themselves:

"Property held for sale in the ordinary course of your farm business. Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. Gain or loss from sales or other dispositions of this property is reported on Schedule F (Form 1040) (not on Schedule D (Form 1040) or Form 4797)."

You can read more here: https://www.irs.gov/pub/irs-pdf/p225.pdf

I hope this helps. Enjoy the rest of your day!

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Customer reply replied 5 months ago
I wish to opt out and have no further contact, thank you.
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 5 months ago

I am sorry you feel this way, and I wish I could have given you better news. But livestock is inventory and the truth is it does not qualify to be treated as a capital asset to receive the capital tax rates.

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Customer reply replied 5 months ago
Sorry not being rude, I just realised you are in America and intended to pose this question to our
Australian Tax Office. Thank you anyway
Customer reply replied 5 months ago
No please just cancel our contact and I will Sort this out in Australia. Please cancel the charges to our credit card .
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Shan-Nel Simmons
Shan-Nel Simmons, Enrolled Agent
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