


We provide a variety of services for you
Raising alpacas on your own property:
First you must establish that you are actively involved in the business and desire to make a profit. Alpaca ownership suggests you:
| A. | Operate the farm in a business like manner |
| B. | Depend to some degree on income from your farm |
| C. | Calculate that losses are circumstantial and beyond your control or are normal in the start up phase |
| D. | Change your operations to increase profits |
| E. | Conduct operation as a business, not a hobby |
Even if you are a passive investor you will still be allowed the following tax benefits.
Deductible Expenses:
Also refer to Section 179 from the IRS that allows a substantial deduction each tax year for expenses.
Please note that once you have determined either a net income or loss, that amount is included on the tax return. It is either an addition to or a deduction from ordinary income. Losses can be carried back for 3 years and forward for 15 years. To deduct any loss, you must be at risk for an amount equal to or exceeding the losses claimed. The “Risk Factor” is:
The passive owner’s losses that are in excess of current income can be carried forward and taken against future income. Timing is the issue.
Tax deferment:
Alpacas in which you have cost basis can be written off over 5, 7 or 10 years if
there are being held as breeding stock. Straight line or
accelerated schedules allow for a percentage of the asset to be written
off. Example: An alpaca is purchased for $20,000, depreciated for 2.5
years or 50% of its value and then resold for $20,000. There would be a
gain for tax purposes of $10,000. Result = The adjusted cost basis is
deducted from your sale price to determine gain or loss.
Capital Gain Treatment:
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Please refer to IRS Publication 225, “Farmer’s Tax Guide” for more information. It can be attained at the IRS website http://www.irs.gov
Your accountant can advise you of your tax structure and we recommend that you follow that advice.
Many alpaca owners who have been involved in the alpaca lifestyle have found it both
personally and financially rewarding
Finca Serena Alpaca Ranch - Maryland - 443-498-8476