Last Minute Section 179 Clarification

After teaching an alpaca tax class I recently sent out a clarification on some Section 179 related issues . . . thought the blog would be a good place to share them as well. Let's face it . . . taxes are basically boring . . . but a necessary evil. So I am really summarizing the issues here . . . if you have any questions please feel free to contact me or your tax professional. The above link goes to IRS Publication 225 (a must for all of us to have on listed under our "favorites") the discussion on Depreciation and Section 179 begins on Page 35.

If you are unincorporated—filing your alpaca business on Schedule F of your Form 1040—you can carry your unused Section 179 deduction forward for an unlimited number of years. This may or may not be a good plan for you. If all of your income is earned—such as wages or self-employment income—you may lose the benefit of your exemptions and itemized deductions. Be sure you review your return prior to filing to be sure you and your tax professional have had a meeting of the minds on the proper treatment of this issue. If the number on the bottom of page one is zero or materially less than the combined amount of your itemized deductions and exemptions you may want to reconsider the treatment given to the assets purchased during the prior tax year to determine if you would have been better served by depreciating them as opposed to writing them off under Section 179.

As an alternative, you might want to consider depreciating your assets in order to create a net operating loss which can be carried back to generate a refund of taxes paid in prior years. Section 179 cannot be carried back—it can only go forward. But a net operating loss generated currently can go back to release previously paid taxes.

If you are anticipating current year alpaca purchases which could provide Section 179 deductions or have Section 179 deductions rolling over from prior years you can use that information to reduce your withholding or estimated tax payments

If you, like many new breeders, filed returns in the past but did not show any alpaca activity even though you were active because you did not have any income to offset your deductions you can amend those returns and take those deductions, elect the Section 179 deduction on the assets purchased in that year and generate a refund.

The above alternatives could provide you with funds to make your monthly alpaca payments or help to pay for your initial herd all due to reduced taxes currently or refunds generated from prior years.

You don’t want to create a partnership, corporation or LLC until you have discussed the various alternatives with your accountant or tax professional. Staying self-employed until you anticipate having some cash inflow generated from your alpaca business will generally allow you the most flexibility in the use of your Section 179 deductions.

Please be assured you don’t need to become tax specialists—you just need the tools to understand your alternatives. Don't forget April 15th lands on a weekend this year so your taxes will be due Monday, April 16th.

Herd Health Seminar and Directions to OSU Veterinary Hospital

Oregon State University Veterinary Teaching Hospital has added another seminar on Sunday, March 18th, which will concentrate on herd health. Topics will include nutrition, parasite control, vaccinations, herd monitoring, “red flags” signs of disease.

Cost for the Herd Health Seminar:

$100 per person for people already signed up for the Neonatal Seminar

If only attending the Herd Health Seminar:

$225 Standard (includes conference, book and boxed lunch)

$195 Discounted cost for members of WVLF, SWAA, CABA, WABA, EVAA, SOJAA ─ in recognition of those organizations’ past support of the CVM (includes conference, book and boxed lunch)

$145 Additional companion at same address (includes conference and boxed lunch)

Directions:

From I-5 take exit 228 and go west on Route 34 and go 10 miles to Corvallis.

Turn left at 30th street and follow signs to OSU Vet Med.

Or From Route 34, go left at signs for "Eugene and Ocean Beaches."

Get off at first exit for "Philomath and Ocean Beaches."

Take right at 15th street, a left on Western and a right at 30th.

We would like to thank OSU for providing us with such quality education and being there for all of us when we need it the most.

Alpaca Business and Tax Planning Course

Mark your calendars for Friday, February 23rd, for the next Alpaca Business and Tax Planning Course being offered by Northwest Alpacas and Alpacas at Tucker Creek. The course is being presented at NWA's conference center at their beautiful headquarters in Hillsboro, OR. Peggy will be presenting the tax section while Fred Kraft from NWA will be presenting the business planning portion of the course . . . just click on the title above to view the schedule. The above cartoon is just a sample of the many you will see throughout the day . . . don't know where Fred finds them all.

Just a couple of quick reminders for tax planning purposes:

Standard Business Mileage Rate for 2006 - 44.5¢ per mile

Standard Business Mileage Rate for 2007 - 48.5¢ per mile

Section 179 Deduction for 2006 - $108,000 with phaseout beginning at $430,000

Section 179 Deduction for 2007 - $112,000 with phaseout beginning at $450,000

April 15th lands on a Sunday this year . . . so you have until Monday, April 16th to file your taxes.

Hope to see you on the 23rd.

MSA Peruvian Cannonero standing stud at Alpaca Woods Ranch in Georgia

MSA Peruvian Cannonero will be standing stud for the first time in the southeastern US at Alpaca Woods Ranch in Snellville, GA (outside of Atlanta). Ronnie Nagimesi, owner of Alpaca Woods Ranch, knows first hand the value of Cannonero offspring as he has two from the 2006 birthing season--Stella Asta and Taylor Skye--each of them demonstrating wonderful crimp and bundling with excellent conformation and vigor.

Breedings are $2,500 (multiple breeding discounts are available) and the breedings can be at Alpaca Woods Ranch or your farm (if you are within 500 miles of AWR).

Unfortunately, there are currently no Cannonero offspring at Alpacas at Tucker Creek--as soon as a Cannonero bred female gets near delivery she sells. For the 2007 birthing season we have two crias due:

• with Jasmine (we can't sell her, David's mother fell in love with her when she was born--so I guess we will have at least one Cannonero offspring this year) and

• Sorpressa . . . a beautiful female out of Glacial Storm . . . I always have to keep reminding myself this is a business and she is for sale . . . an incredible cria should result from this mating.
  
  

In case you are not familiar with Cannonero . . . follow this link to view his ARI registration certificate:

http://www.alpacanation.com/images/uploads_aricertificates/11285_12150_CannonerosRegistrationCertificate.jpg

and this link for further details:

http://www.alpacanation.com/herdsires/03_viewherdsire.asp?name=12150

. . . a wonderful combination of Peruvian Hemingway, Pperuvian Camilio and Pperuvian Navidad . . . incredible.

We can't wait to see the results this Spring and wish you all a safe, healthy and productive 2007 birthing season.

October Fest goes to the hospital

When you and your vet finally decide a trip to the veterinary hospital is the next step for you and your alpaca . . . don't equate that to a negative experience. You are in for an educational experience. In our case it was a trip to Oregon State University's Lois Bates Acheson Veterinary Teaching Hospital. The staff at this facility is very user-friendly and very qualified when it comes to camelids. They didn't usher us to the waiting room or tell us to come back later in the day. We spent the day with October Fest and her cria, Zafiro, as she was shaved, poked, proded, ultrasounded from every possible angle, scraped and pretty well examined from stem to stern so to speak.

To summarize the reason for the trip . . . even after her delivery of beautiful Zafiro in September she continued to be bloated . . . and the bloating would go from one side to the other and some days both sides.

By the end of the day no one was able to shed any light on her bloating . . . but we did learn quite a few other important bits of information. She has a variety of heart issues. . . none that can be treated . . . none that would be identified as inherited . . . but now we know. She was low on phosphorous . . . so now we are looking at her overall diet and what we can do to improve her overall levels. She has had a limp for years and it does bother her from time to time . . . especially during breeding. They recommended several days of phenylbutazone prior to breeding to reduce any discomfort associated with her lameness. Additionally, glucosamine and other joint supplements were recommended to supplement her current care.

This trip reinforced the need for extensive research in camelids and supports the need for all of us in the industry to contribute and support the work being done by the Alpaca Research Foundation as well as the various colleges around the country such as Oregon State University, Ohio State University, University of California at Davis and others who are making strides toward that end.

So we didn't get the answer we were looking for . . . but we learned a great deal about October Fest . . . every specialist that could possibly have seen her did see her and the bill for the day was way less than one would expect for the caliber of care and the technology that was employed for her examination.

Thank you to Dr. Erica McKenzie, Dr. Laura Waitt and the entire staff at OSU for your continued concern for the patients in your care and the owners who love them.

Oregon State University CVM Camelid Neonatal Seminar

Just click on the title above for the online details and registration form for the upcoming Camelid Neonatal Seminar being offered by Oregon State University. Please share this info with your friends. This is one of the best seminars I have attended since we started breeding alpacas.

Look forward to seeing you there.

Oregon State University CVM Camelid Neonatal Seminar

Just received the email we have been waiting for from Oregon State University . . . they have scheduled the neonatal seminar for Saturday, March 17th . . . here are the details.

From: Hutson, Pat [mailto:Pat.Hutson@oregonstate.edu]
Sent: Friday, January 12, 2007 3:48
Subject: Oregon State University CVM Camelid Neonatal Seminar

Hello all,

Thank you for your patience! I hope you are still interested in attending the camelid neonatal seminar, because the date has finally been set.

Please feel free to share the information with others you think might be interested.

Thank you!
Pat

Pat Hutson
Office of the Dean
College of Veterinary Medicine
Oregon State University
Corvallis, OR 97331
541-737-2268
Fax 541-737-4245

Camelid Neonatal Seminar
Saturday, March 17, 2007
8:30 a.m. – 5:30 p.m.
Magruder Hall
College of Veterinary Medicine
Oregon State University
presented by Dr. Christopher Cebra and others

In South America, up to half of the newborn camelids

die before they reach weaning age. To prevent that from happening

in your herd, the Oregon State University

College of Veterinary Medicine is proud to announce the

resumption of its neonatal clinics for camelid owners.

• State-of-the-Art Lectures
• Hands-on Work
• New Information
• Llama and Alpaca Neonatal Care ─ book by

Drs. Karen Timm and Brad Smith

included in the seminar price

Please contact either Pat or AATC for a registration form (I haven't figured out how to post a form on a blog . . . maybe you can't).

Submit the registration form by fax, email or mail

by February 15, 2007.