Glasgow Daily Times, Glasgow, KY

Local News

March 17, 2011

Tax rules confusing in Eastern Livestock case

GLASGOW — As tax season continues, confusion reigns with local cattlemen as they try to figure out whether they can file a loss on their taxes if they received bad checks from Eastern Livestock last fall.

Some farmers who lost thousands of dollars can’t claim a loss because they raised the cattle themselves. Other farmers can claim a loss, but a loss of how much they paid for the cattle originally, not the amount of the bad check.

“It’s sort of a complicated situation,” said John Taylor, CPA at Taylor, Polson & Company in Glasgow.

If a farmer bought the cow that he later sold to Eastern Livestock, he can get a write-off if he has not fully depreciated the cow. If the cow was born on the farm and the farmer raised it from birth, then he cannot claim a write-off because all the expenses of raising the cow have already been written off his taxes over time.

“It’s not a thing where nobody will be able to claim a loss, but if the farmer raised the cow and didn’t buy it, they don’t have a write-off,” Taylor said.

Rick Hope, who lost $4,300 to Eastern Livestock at the Edmonton livestock market, was confused when he heard at Monday’s Metcalfe County Cattlemen’s Association meeting that farmers were not able to claim the cattle on their taxes. Hope raised his cattle, but thought he would be able to claim the loss of income when he files his taxes.

“I thought it would be counted as a loss,” Hope said. “I was planning on counting it as a loss.”

Hope gave the example of having a calf that he raised die before it was ready to be sold.

“Typically, you can count that as a loss...” he said. “(Now) I’ve lost income just as if that calf had died. More so, because I’ve kept them longer.

“So why shouldn’t I get to count that as a loss?”

Gary Bell, who lost $14,280, said he understands why he can’t claim a loss on his taxes since he raised his cattle.

“You can’t deduct something you didn’t have a basis in,” Bell said. You would have to claim the income of the bad check and then the loss, and it would cancel out, he added.

Taylor said he understands why farmers want to claim a deduction after the work they’ve put into their animals, but “you can’t take a deduction where you’ve never reported the income.”

To Hope, it doesn’t make sense, since he lost his cattle and didn’t get paid for them.

“I’ve incurred expenses either way and I’ve reaped no income,” he said.

Every situation is different, Taylor said, and each farmer should consult with a CPA to determine if they are eligible to file a loss on their taxes for the cattle they lost to Eastern Livestock.

“It’s not an absolute slam dunk that they don’t have a write-off,” Taylor said.

Local farmers lost approximately $900,000 in one day at the Edmonton livestock market last November when they sold their cattle to Eastern Livestock and received bad checks. An investigation began within days of the Edmonton market, but it was too late for local cattlemen. In January, the owner of Eastern Livestock filed for bankruptcy and the investigation and court proceedings are ongoing.

A new class of creditors was created specifically for this case in order to recognize the farmers, almost all from the Edmonton market, who sold cattle directly to Eastern Livestock. The new class is called purchase money creditors, which recognizes the cattlemen as being in a unique position of being owed money after not intentionally extending credit to Eastern Livestock.

Farmers who received bad checks from Eastern Livestock must file a proof of claim in the bankruptcy court by May 2, 2011. Claim forms can be picked up at the Barren and Metcalfe County Cattlemen’s Associations.

Text Only
Local News
AP Video
Raw: Families Travel to Taiwan Plane Crash Site Arizona Execution Takes Almost Two Hours Gen. Odierno Discusses Ukraine, NATO at Forum Gaza Fighting Rages Amid Cease-Fire Efforts Mint Gives JFK Coin a Face-lift Creative Makeovers for Ugly Cellphone Towers Ariz. Inmate Dies 2 Hours After Execution Began Crash Kills Teen Pilot Seeking World Record LeBron James Sends Apology Treat to Neighbors Raw: Funeral for Man Who Died in NYPD Custody Migrants Back in Honduras After US Deports Israeli American Reservist Torn Over Return Raw: ISS Cargo Ship Launches in Kazakhstan Six Indicted in StubHub Hacking Scheme Former NTSB Official: FAA Ban 'prudent' EPA Gets Hip With Kardashian Tweet Bodies of MH17 Victims Arrive in the Netherlands Biden Decries Voting Restrictions in NAACP Talk Broncos Owner Steps Down Due to Alzheimer's US, UN Push Shuttle Diplomacy in Mideast
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Seasonal Content