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Investing 101

Basics:

Alpacas have been called "the world's finest livestock investment."  They can provide revenue potential and generous tax incentives.  
  • Alpacas are fully insurable against loss - try that with your stock portfolio.
  • Sales of fleece and fleece products typically generate enough revenue for annual feed costs.
  • You can "agist" alpacas on your farm - that is the term for boarding alpacas for an owner that may not currently have the space or farm setup to keep their alpacas.
  • Tax deferred savings - your herd can increase in value without tax implications until you sell.
  • From the business perspective, alpacas can be considered a qualified business property that you can depreciate over time, or deduct the full purchase price through a Section 179 deduction - learn more about this below.
  • Many expenses directly related to caring for your alpacas are deductible.
  • Even if you agist your alpacas you still qualify for certain tax breaks.

What other investment can provide so much enjoyment?

Section 179

Businesses have traditionally been able to depreciate eligible business property and deduct the expenses over a several-year period.  Section 179 of the IRS tax code was introduced several years ago to stimulate small businesses by allowing them to deduct the full purchase price of qualified "equipment" or property, all in the year of purchase.  Livestock is considered property that qualifies.  The Section 179 election is made on IRS Form 4562 for the year the property was placed into service.  For more information, review IRS's publication 225 "The Farmer's Tax Guide", and the IRS Publication 946 "How to Depreciate Property". 

Like any other business investment, consult your accountant. 

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Big Red Acres Alpacas
Jen & Tom Boshar
159 Holt Road
Andover, MA 01810
bigredacres@verizon.net