7910 / Are breeding cattle depreciable?

Yes. Amounts expended for the purchase of breeding cattle are capital expenditures for which depreciation deductions may be taken.¹ Because most investment entities involved in cattle breeding must capitalize the expenses of breeding and raising cattle (see Q 7911), the depreciation allowance is of significant importance. Accrual basis taxpayers may elect to inventory breeding cattle instead of capitalizing the purchase price and taking depreciation deductions² (see Q 7913).

Depreciation deductions cannot be taken for the period before property is first “placed in service,” that is, placed in a condition or state of readiness for a specified function in a business or investment.³ Thus, if the taxpayer acquires immature livestock not yet suitable for breeding, the cost cannot be depreciated until the livestock reach maturity.⁴

The method of determining the amount of allowable depreciation deduction depends on when the property is placed in service. Cattle placed in service after 1986 are depreciated under a modified form of the Accelerated Cost Recovery System (ACRS).