Agriculture
Income Tax Information - Items Purchased for Resale
If you use the cash method of accounting, you can deduct the cost of
livestock and other items purchased for resale in Part I of Schedule F in the
year of sale. This cost includes freight charges for transporting the livestock
to the farm. Ordinarily, this is the only time you can deduct the purchase
price. Refer to Farm Business Expenses, Items Purchased for Resale in
Publication 225.
Example:
You report on the cash method. In 2000, you buy 50 steers you will sell in
2001. You will report the sales price minus the purchase price (and any freight
cost) as income in Part I of your 2001 Schedule F.
Additional Resources
Publication 225, Farmer's Tax Guide
Publication 538, Accounting Periods and Methods
