# Taxes and catorogies



## Roland (Dec 14, 2008)

I know you said to PM you, but this is what I have developed with my accountant:

If the packages are for newly established hives, they are considered a current asset, and never depreciated.

If the packages are to replace losses, they are expensed that year.

If you do it this way, your balance sheet will reflect the value of the bees accurately. I adjust the percentage expensed so that the number of hives times the current package cost is what shows up as an asset, and not use the purchase price from years ago to determine value. 

Crazy Roland


----------



## SPRUCE BEE (Mar 14, 2009)

My wife is an accountant & she "ORDERS" me to my day job every morning, especially when I bring up the topic of buying more bee stuff 
I'll ask her when she is in a good mood :lpf:


----------



## honeyshack (Jan 6, 2008)

Bees are an asset and should not be depreciated.
depreciation should occur on things like trucks, livestock equipment like hiveware.
Other expense listings are
Feed...suryp and pollen
Vet,,, medications, and miticides, EO's
small tools
gas
diesel
repairs...vehicle, fence, hive repairs, extraction repairs, building repairs
Insurance
accounting/legal
subscriptions
meals and travel % ...if this happens with your operation
electricity %
phone %
If you packag your honey...containers and jars
anyhow a start
If this is going to grow, recommend an ag accountant. Worth their weight in gold


----------



## Steve10 (Nov 19, 2008)

Eastside, you are correct. Bees are a perishable commodity with a lifespan of less than a year, and hence are an expense. Livestock are usually NOT treated as an depreciable asset. It a mute point anyway because for 2011, the section 179 election allows us to expense up to $500,000 worth of depeciable assets. If you're buying $500K worth of bees, you probably can afford a good tax attorney to keep you straight.


----------



## LT (Aug 17, 2006)

How do you report the mileage? Actual gas-diesel cost or mileage?


----------



## Roland (Dec 14, 2008)

Larry, Who owns the vehicle, you or the Company?

Crazy Roland


----------



## bluegrass (Aug 30, 2006)

Deducting mileage is a sure way to get audited, especially if you didn't do it the year before. I always keep the gas receipts. 



> Eastside, you are correct. Bees are a perishable commodity with a lifespan of less than a year, and hence are an expense


Without outside influences the colony as an organism is immortal.


----------



## sqkcrk (Dec 10, 2005)

Standard mileage deduction is how it's done, mostly, isn't it? Reporting the miles driven at the end of the year and multiply by the IRS allowance for the years past. That's how my accountant does it.

You can Deduct all expenses, but not both expenses and mileage.


----------



## MichaBees (Sep 26, 2010)

Whats catorogies?


----------



## Steve10 (Nov 19, 2008)

bluegrass said:


> Without outside influences the colony as an organism is immortal.


I'd love to be a fly on the wall when you're trying to explain this to the IRS!


----------



## bluegrass (Aug 30, 2006)

Steve10 said:


> I'd love to be a fly on the wall when you're trying to explain this to the IRS!


If the bees are disease free and store away an adequate amount of food... the colony will live forever even though the life of the individual bee is short.


----------



## Roland (Dec 14, 2008)

SQKCRK wrote:

You can Deduct all expenses, but not both expenses and mileage. 

I agree. We deduct expenses for the company vehicle(77 Grumann), such as fuel, oil, repairs,and insurance(can not depreciate a on dollar vehicle), but if we use my private vehicle(82 Turbo Diesel Vanagon), I get reimbursed according to the IRS mileage allowance that was previously mentioned. I can not say it is correct, but that is what our accountant suggests.

Crazy Roland


----------



## jim lyon (Feb 19, 2006)

Roland: 82 Turbodiesel Vanagon? Seems like everyone is driving those things around.


----------



## MTINAZ (Jan 15, 2010)

I have been self employed for my regular job for a number or years. With personal owned vehicles my accountant said I got a better deduction by taking miles, as things like gas, oil changes were less than what the per mile amount added up to be. Not sure how he did the bee side but on the form there was a spot for ag losses. I think good accountants are worth every penny.


----------



## Stevebeeman (May 22, 2011)

Bees are considered “livestock” for federal income tax purposes. Since they have a life span of less than “one year” (about 7 weeks), they are “expensed” in the year purchased, not capitalized, and not depreciated. Assets with a useful life of less than 2 years are not depreciated. The hives are “Special Purpose Agriculture Structures” and qualify for Section 179 depreciation (you can elect to write them off in the year you purchase them). For financial reporting purpose, this is another matter.
You cannot use the mileage rate if you have started depreciating the truck. Federal law allows you to take actual costs or a mileage a rate of only $0.55 per mile. The cost of repairs, maintenance, fuel, insurance, the depreciation of the purchase price is far more than the standard mileage rate.
If your CPA does not have other beekeepers as clients find one that does. This is a very specialized field.


----------



## Stevebeeman (May 22, 2011)

EastSideBuzz said:


> My accountant had questions this year about if bee's were live stock.


If your accountant does not know that Bees are livestock for tax purposes, you need to find another accountant. That's like saying she didn't know bees made honey.


----------



## sqkcrk (Dec 10, 2005)

So, if bees are livestock, do you account for each individual bee or just each colony?


----------



## Stevebeeman (May 22, 2011)

sqkcrk said:


> So, if bees are livestock, do you account for each individual bee or just each colony?


If you think it is material enough to account for each bee then I would suggest you put a brand on each one as to keep tract of them.


----------



## sqkcrk (Dec 10, 2005)

I guess I just account for the cost of the Queens purchased each year. Do the rest of you Deduct for the deadouts inventoried Dec. 31st?


----------



## Roland (Dec 14, 2008)

I must be doing something wrong. Stevebeeman CORRECTLY wrote:

The cost of repairs, maintenance, fuel, insurance, the depreciation of the purchase price is far more than the standard mileage rate.

I can make money off that standard mileage rate, 82 VW vans don't depreciate any more, I do my own repairs and maintenance, 30-32 MPG hauling 1400 lbs, Cheap ins..... .... Yup, must be doing something wrong. 

SQKCRK - no inventories on Dec. 31st of bees here. 

If bees are not capitalized, how do you show them as an asset on a balance sheet? They obviously have value, and should be represented as such? (Honestly asking, NOT trying to provoke)

Crazy Roland

Don't worry, I am not a hippy, I DO remember the 60's, so by definition, I "was not there".


----------



## Stevebeeman (May 22, 2011)

Roland said:


> Yup, must be doing something wrong.
> 
> If bees are not capitalized, how do you show them as an asset on a balance sheet? They obviously have value, and should be represented as such? (Honestly asking, NOT trying to provoke).


No, in your case you are not doing anything wrong...unless you are using the $0.55 mileage rate on a fully depreciated car, in your case, your mileage rate is about $0.25 per mile. That's a rare case have to look up the exact rate.

Showing bees on a balance sheet is not the same as Federal Income Tax accounting. Financial Accounting, is covered under General Accepted Accounting Principles (GAAP). When we prepare financial statements for the banks we use current market value of the hives, has nothing to do with tax write offs allowed by the Feds. Not correct GAAP either but that’s another story.
As for writing off your dead outs at the end of the year, their value (for tax purposes) is ZERO. You should have already expensed them the day they were purchased. Can't write them off twice. 
As for queens, also livestock, they would qualify for IRS Section 179 depreciation, however unless you are paying over $500.00 apiece, their amount is “immaterial” for capitalization purposes and should be expensed.

Hope this Helps


----------



## MTINAZ (Jan 15, 2010)

Stevebeeman said:


> When we prepare financial statements for the banks we use current market value of the hives,


Is there an outside source for this market value? We went to a bank to buy out another beekeeper and the bank would not value the hives and there for not loan on them.


----------



## Stevebeeman (May 22, 2011)

You can get comparable values from this web site (BeeSource), The American Bee Journal Classifieds, other web sites etc. just take a look at what others are selling their hives for.
You should look into the USDA, FSA loan programs. They have someone that will value your hives. Also just consider what the cost would be to replace your hive equipment and coloines. Most banks, unless you have estiblished a relationship with them will not loan to new beekeepers without an FSA loan guarantee.


----------

