Benifits

TAX ADVANTAGES & INVESTMENT RETURNS

OF ALPACA LIVE STOCK

Raising alpacas is a most rewarding lifestyle along with some very attractive tax advantages. If you are raising them for profit, the expencses associated are deductions from your income for tax purposes

Although write-offs can be one of the major financial benefits of alpaca ranching as long as the following applies:

1. You must operate the ranch in a business manner(ie., appearing to make a profit).
2. An organized business plan with justifiable business decisions.
3. You or your spouse must acitvely be involved in the industry.
4. A must is having adequate bookkeeping methods.

                                                  What can be Deducted?

Farm improvements and expenses are either deductons or amortized deductions.

Some of these include:

*Feed, fertilizer, chemicals and vet care.

*Farm repairs and maintenance, fuel and oil

Interest,taxes and insurance

*Breeding fee

*Educational expenxsrs to improve farming expertise

*Advertising and farm publications

*AOBA and other association dues*Vehicle milage for all farm business. This includes trips to breeder conferences shows and alpaca ranches.

                                              What can be depreciated?

*Purchased breeding stock may be depreciated over a 7 year period(Example,you purchase 2 pregnant females for $30,000. You could deduct $30,000/7 yrs=$4286.00 from your income over the next of each 7 years. If you have borrowed to buy breeding stock, the interrest is fully deductible from income as well.

*Capitol improvements such as barns,fences,pond construction,driveways, and parking lots can be expensed over their usefull life. Equipment such as tractors,pickups,trailers ad scales each having an approiate schedule for depreciation.

* $17,500 of depreciable expenses may be directly expensed in one year under the IRS "Section 179" allowance.

                                           Other Financial Advantages of Alpaca Ranching

*You may be able to qualify for agricultrial property tax deferal.

*Improvements to facilities not only are duductible expenses, but increase the real value to you property.

*The purchase price of a breeding female may be recovered in only 1-2 years from the sale of offspring. Annual fiber sales can help to offset feed and maintenance expenses.

*Sales of outside breedings to a hersdire are also a source of income* a small ranchercan purchase several alpacas and allow the herd to grow over time wothout paying income tax on its increased size and value. In contrast, of an investment in a CD, interrest earned during the year would be taxable, and not depreciable.

                                              PLEASE NOTE:

Because the tax laws are complicated and do change frequently, we recommend consulting with a tax professional or a licenced CPA for further details on income advantages. This article is ment only as information purposes. A very useful IRS bublication (#225, The Farmers Tax Guide) can be found at a local IRS office.

An other usefull publication is US Department of Agriculture Research Service.

                                                 Contact us at

                                          www.alpacasbychoice.com

                                                      Alpacas By Choice

                                        3745 FM 1446, Waxahachie,Texas 75167

                                     817 798-2080 or 817 798-2074 Fax 1 888 229139

                                cooper@alpaacasbychoice.com or sam@alpacasbychoice.com