Law & Legal & Attorney Tax Law

Tax Write-Offs for Catfish Farms

    Feed

    • Since catfish convert two pounds of feed into one pound of body weight and grow in size rapidly, catfish farmers must stock large amounts of feed, according to Suttle Fish Farm. A catfish farmer may want to purchase bulk orders of feed in advance if he obtains a better deal by buying in bulk. Even if she does not use all the feed he purchases in a tax year, he can take a full deduction for his costs in the year in which he paid for the catfish feed.

    Depreciation

    • Depreciation allows fish farmers to deduct from their farm income some expenses paid for capital equipment and property, including structures used to raise, house and feed their fish, pumps, oxygen meters, harvesting equipment and other equipment used for business purposes. Fish farmers cannot depreciate the costs of land or the installation costs of ponds. Section 179 of the Internal Revenue Code allows fish farmers to depreciate costs worth up to $500,000 in a single tax year as of 2011, according to Section 179.

    Interest

    • Due to the high costs of starting up a catfish farm such as digging wells and ponds and purchasing oxygen meters, aerators and harvesting equipment, most catfish farmers will take out a loan when they start their business and may obtain additional loans to expand their operations. If fish farmers use these loans for business farming purposes, they can take a full deduction in the year in which they paid the interest to a lender, according to the IRS. If they prepay interest, they cannot deduct advance interest before the tax year it would have been due if they had paid on a annual basis.

    Maintenance

    • Catfish farmers must frequently replace pumps and fix trucks, tractors and harvesting equipment. They can deduct their expenses for repairs in the year in which they paid for them if they restore equipment to its original condition. In order to restock their ponds every year, they may raise their own fingerlings or purchase them from a supplier, allowing them to deduct all of their breeding and restocking expenses, according to the IRS.

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