[USER]

I have a goose that lays golden eggs, and I was wondering if I can use the feed & veterinarian bills to offset the tax liability from the sale of the eggs.

Also, do I have to claim the tax benefit in the year I sell the eggs, or can I claim this in another year when it might benefit me more?

How do you value the depreciation on the goose?

[Damian]

asking how to handle expenses and depreciation related to a unique source of income (the golden eggs from your goose) from a tax perspective, so here’s how you could think about it, using principles that apply to real-world

income and depreciation tax laws:
1. Offsetting Feed & Veterinarian Bills
Yes, you could potentially offset feed and veterinarian bills against the income from the sale of the eggs, assuming this is considered a business or income-producing activity. To do this:

You would likely classify the goose and its associated expenses as part of a “business activity” if you’re selling the eggs regularly and for profit.

Expenses such as feed, veterinary care, and other costs related to maintaining the goose can typically be deducted as ordinary and necessary expenses in the year they are incurred.

For tax purposes, these expenses would reduce the overall taxable income from the sale of the eggs.

You’d report both the income from the sale of the eggs and the associated expenses on your tax return, likely on Schedule C (Profit or Loss From Business) if you’re a sole proprietor.

2. Claiming Expenses in Another Year
Most tax systems operate on a “yearly” basis, meaning that you generally must claim income and expenses in the year they are incurred.

So, if you sell the eggs and have related expenses in the same year, you’ll need to report them together in that tax year.

There are exceptions in certain cases for multi-year activities, but for day-to-day income-producing activities like selling eggs, you’d need to claim expenses and income in the year they occur.

However, there might be opportunities for carrying over losses or deferring income in certain situations.

If you have a loss (your expenses exceed your income), it could be possible to carry forward that loss to offset future profits, but that depends on the structure of your business and local tax laws.

3. Depreciation on the Goose
Depreciating a goose is an interesting concept, but the principle is similar to depreciating any income-producing animal in agriculture.

The goose would be considered a capital asset, and you could depreciate its value over its useful life, according to the rules for livestock depreciation.
Valuation of Depreciation:

The starting value (or basis) of the goose would be its purchase price, or its fair market value if it was given to you or acquired in a different way.

The useful life of the goose for depreciation purposes would be based on the expected lifespan during which it produces golden eggs.

The IRS or local tax authorities might not have a clear guideline for geese that lay golden eggs, but livestock generally has depreciation schedules ranging from 5 to 7 years.

You could depreciate the goose on a straight-line basis, which means you’d deduct an equal portion of its value each year over its useful life.

For example, if the goose’s value is $10,000 and its useful life is 5 years, you could deduct $2,000 per year for depreciation.
In Summary:

1. You can deduct the feed and vet bills as business expenses in the same year you sell the eggs.

2. Expenses generally have to be claimed in the year they’re incurred, but there may be some flexibility with losses or multi-year deductions depending on your situation.

3. Depreciate the goose over its useful life based on its initial value and the expected number of years it will produce income (golden eggs).

Would you like to explore any of these ideas further?

[Martin]

Move goose to state without a state income tax. Save some money

[Author]

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