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How real cow depreciation differs from Uncle Sam’s

Know the value of cows at various ages and consider selling them near peak value. 

Believing that Uncle Sam’s depreciation schedules are the same as real cow depreciation is a mistake cattlemen often make.

Real depreciation relates to the true value of something as it ages and/or declines. An example is this: a new-purchased tractor may hold far more value, far longer, than the straight-line depreciation schedule allowed by the IRS. When you sell that used tractor for a reasonable price, you'll have to make up the difference between the value to which you depreciated it and the higher price at which you sold it.

This difference between Uncle Sam's depreciation and actual value can offer advantages, even opportunities. One of those is the difference between real cow depreciation and IRS cow depreciation schedules. It's another of those things that Wally Olson from Vinita, Okla., has been schooling me on for some time now.

To read Newport's entire column, click here.


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