TAXES :-) Can we right off snakes we bought?

So you buy a 1.1 adults. You are not selling them but you are selling the babies that they are going to produce.
Can these snakes be declared as expenses for the business, like the racks, the rats, the paper..... or just because your commodity is snakes (even though you are not selling these and they are just expenses to get the commodity, you cannot right them off as expenses?

How you guys do it?

I write off everything I buy for the business including new snakes. Keep in mind that if you do set it up as a small business in your taxes and deduct everything you will get hit big time if you actually make a profit. I cleaned fish tanks for awhile and made about $10,000 profit per year with virtually no expenses. At the end of the year the IRS wanted nearly half of that so I had to be ready to fork out about five grand. And I was penalized by not paying quarterly taxes, they assume that they can gain interest on it as they go through the year so basically you are paying them the interest they missed out on (or just file quarterly taxes).

The best way to run the business is to reinvest all of the money back into the business. I worked in a chemistry lab for eight years and we took a loss every year. But the lab grew and expanded, they used all of their profit to put back into the business, I assume to avoid taxes. Plus they were a corporation with investors so it didn't really matter that much, it's slightly different.

It's kind of risky though not having a nest egg to fall back on, I think it's better to show a little profit every year and build up a nest egg for the bad years just in case. Last year I showed a loss of $22,000. Instead of paying $3,000 in taxes I got a refund of $8,000. Of course last year my wife and I both had full time jobs and paid a lot into income taxes, it wouldn't work that way if you just had the business, you would get zero return for showing a loss.

My company is called 'Chris Hardwick Reptiles' but I blanket everything into that business name, my Angus Cattle, Dogs, Ducks, Fish, Reptiles, etc... Every animal on the farm will eventually show a profit and there will come a time where my business will be large enough to stop growing it and I'll make a bunch of money on everything. Then I'll have a major tax problem LOL. At that point I'll start investing in tax deductible retirement options. And some of the big time reptile guys fly all over the world and travel to reptile shows burning up all their profit and having fun doing it! Since you save 50% in paying taxes it's like everything is 50% off (assuming it's tax deductible). I think the government sets it up that way to grow businesses and to make the economy grow in general, bigger businesses means more people will be employed.

Also keep in mind that everything resets at the end of the year. So if you take a loss this year it won't affect the profit you make next year. So if you make a ton of money in three years you'll get hit with all the taxes on that profit. It's better to spread things out over a year to even it out, if you make a lot of money invest in something else to avoid taxes. I couldn't imagine making $100,000 and having to pay the IRS $50,000 at the end of the year OUCH.

This is just a guess since I've got no experience...

If you're claiming them on your taxes you'll probably be expected to include the sales of the babies when they are sold.

Again, just a guess...

Thanks guys. And yes I would report selling babies.
So far the conclusion is that I CAN right off snakes from my income. Say I make 50K at my every day job and I bought snakes for 10K so my declared income is 40K. Correct?

This would totally be a question for an accountant, I don't trust armchair quarterback opinions (this would include myself) when dealing with the IRS....LOL.

I think Craig is leaning on the right idea, I'm sure you can write them off....but then you better be sure to include any sales. Personally, this is why I avoid classifying anything as a business and just call it a hobby. I'm pretty sure if you have a declared business for tax purposes, that falls in a completely separate boat as far as filing goes as you're subject to a different tax rate for the business.

I breed as a hobby not as a business so I don't have to worry about justifying a $1000 vet bill on a $100 snake.

My husband and I do have a small business where he does gunsmithing and custom firearm builds, as well as consignments, services like transfers, etc. If you are going to run as a small business versus a hobbyist this is what you need to do:
- Figure out if you want to run as a sole proprietor, or if you want an LLC.
- Register with the state as a business, which includes getting set up to collect and remit sales tax. Most small businesses file quarterly but if you do a large volume (think WalMart) you may have to file monthly.
- If required, register with your county. My county requires it because it collects its own taxes on businesses each year based on your balance sheet.
- Set up a GOOD system for tracking invoices and expenses. I use QuickBooks.
- Be able to prove your expenses; my business was audited three years in a row and I had a receipt for every claimed expense.
- Keep a mileage log, you'd be amazed at how much you drive each year for business.

Take tax questions to a CPA who can analyze your specific business and advise you.

I always did my own taxes until I started a business. Then I got a CPA. Money well spent, they are worth their weight in gold! A good one knows every possible legal way to save you money.

I am doing it with CPA. But he is not sure. He never had clients that have commodity produce another commodity...

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Originally Posted by qwerty53

Thanks guys. And yes I would report selling babies.
So far the conclusion is that I CAN right off snakes from my income. Say I make 50K at my every day job and I bought snakes for 10K so my declared income is 40K. Correct?

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Personal taxes and business taxes can be different or the same. It depends on how the business is set up. This might help or confuse you even more: https://ttlc.intuit.com/questions/29...ersonal-return

As others have said, the best advice is to consult an accountant who is experienced in this area.

It is not registered business. As I said just looking to reduce my main job income.

Find a CPA who has other animal breeders as clients. The IRS is going to care less about the differences between dogs and snakes than we do. :)

As for keeping your breeding as a hobby, that does NOT get you off the hook come tax-time! You (general-you) have to report income and pay taxes on income from a “hobby” as well as from a business.

The hobby/business divide is driven primarily by profit - if the IRS (and by extension your state department of revenue) think that you aren’t tying to be profitable/sufficiently profitable, a business can be classified as a hobby, which means you don’t get to write off certain things. When I started my business 20-mumble years ago the simple formula was that you had to show a profit X out of the first Y years, and then A out of every B years thereafter.

And note that the IRS’s definition of profit may not be the same as yours - profit is *not* purchases minus all purchases and expenses for the year. In my case it’s cost of goods sold minus certain tools, hardware, and certain limited expenses like cost of booth space at shows.

So leather, thread, and needles (because needles wear out/break in a fairly short time period) only come into the profit equation when figuring my cost of goods sold. If I buy a new widget of under $Some I can write it off completely that year, but if I buy a big thing over $Lots, it must be depreciated over a number of years determined by the IRS.

I am not a lawyer or an accountant, point yourself at the IRS and state department of revenue website for all the facts and details.


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Originally Posted by Prognathodon

Find a CPA who has other animal breeders as clients. The IRS is going to care less about the differences between dogs and snakes than we do. :)

As for keeping your breeding as a hobby, that does NOT get you off the hook come tax-time! You (general-you) have to report income and pay taxes on income from a “hobby” as well as from a business.

The hobby/business divide is driven primarily by profit - if the IRS (and by extension your state department of revenue) think that you aren’t tying to be profitable/sufficiently profitable, a business can be classified as a hobby, which means you don’t get to write off certain things. When I started my business 20-mumble years ago the simple formula was that you had to show a profit X out of the first Y years, and then A out of every B years thereafter.

And note that the IRS’s definition of profit may not be the same as yours - profit is *not* purchases minus all purchases and expenses for the year. In my case it’s cost of goods sold minus certain tools, hardware, and certain limited expenses like cost of booth space at shows.

So leather, thread, and needles (because needles wear out/break in a fairly short time period) only come into the profit equation when figuring my cost of goods sold. If I buy a new widget of under $Some I can write it off completely that year, but if I buy a big thing over $Lots, it must be depreciated over a number of years determined by the IRS.

I am not a lawyer or an accountant, point yourself at the IRS and state department of revenue website for all the facts and details.


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Thank you. "In my case it’s cost of goods sold minus certain tools," So my question is are the breeding snakes that I bought tools. Thats exactly my question

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Originally Posted by qwerty53

Thank you. "In my case it’s cost of goods sold minus certain tools," So my question is are the breeding snakes that I bought tools. Thats exactly my question

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First line of my response - you need a different CPA.

If my husband buys his own semi and becomes an owner/operator, the first thing I’ll be asking a CPA is if they have appropriate experience. When I needed a complex concrete footing designed I hired another civil engineer to design it - yeah, I’m a civil and have my P.E., but I know what I do and don’t know..


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Guys I do not need CPA advice. What I am asking is if anyone wrote off the breeding snakes as tools to produce the product I am going to be selling

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Originally Posted by qwerty53

Guys I do not need CPA advice. What I am asking is if anyone wrote off the breeding snakes as tools to produce the product I am going to be selling

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Your question is a simple one. Unfortunately, the answer is complicated because you are talking about the IRS and our tax code.

Theoretically, could you write off your livestock expenses? I'm pretty sure you could under the proper set of circumstances. But that doesn't mean that you should. And it definitely means you shouldn't take my advice on the subject because if you are audited and your write off is not legitimate, not only will you lose your write off, you will likely end up paying interest and penalties on top of it.

Again, simple question... complicated answer... and it is the reason that God invented CPAs.

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Originally Posted by qwerty53

It is not registered business. As I said just looking to reduce my main job income.

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You can only show a loss if you have a legit business; the tax code simply does not permit "hobby losses" though you must declare hobby income.

Also there are much easier ways to reduce your income and/or tax owed than breeding ball pythons:
- 401k contributions
- IRA contributions
- HSA contributions (these also reduce your FICA income)
- 529 plan contributions
- Investment losses, these are capped annually though they can be carried forward into future years

Its a legitimate business
I am not asking for tax advice. I asked if anyone is doing it

If it's a legitimate business then yes you can write it off as a loss. I do it and I don't have a CPA. I use H&R Block tax software, it will walk you through all the steps and ask you question by question of what you can and can't deduct and will put everything you enter on the appropriate forms automatically. And it has links to YouTube videos if you get stuck. And every year they update with the new laws and new links to the videos explaining them in detail. I've been to tax preparers and they never ask me that many questions in that much detail and tell me what the new laws are.

For me the best way to do it is to run it through your tax software the first year when you are starting out and then make a spreadsheet in Excel with all the items you can deduct and track them the following years and save all your receipts. It's amazing how many deductions you can take if you keep track of them all. You can even deduct some meals, lets go to Red Lobster and talk about our snake business! 8) It's also good to talk to other business owners to see what they are taking as deductions.

However, you can't deduct expenses if you don't have it set up as a business in your taxes.

I also like to set up a business bank account with your business name attached (doing business as '...') That way if someone writes a check to your business name instead of your personal name you can actually cash it.

Personally I don't like retirement accounts like 401K, etc. Just too long term for me. It's like saying give me a hundred thousand dollars and if you make it to 65 or 70 years old you may or may not get all of your money back LOL. I'd rather have complete control of that money, I can double it in a few years easily. Or I'd rather use that money to pay off my debt. Maybe if I were debt free and didn't want to expand my business and was making a ton of money and had a tax problem because I was making huge profits then yes, I'd consider investing in the market. I would much rather invest that money in a business I know will be profitable than risk it in the market. Either way it's tax deductible.

I know this thread is a little old, but the information is still relevant.

1). Anything related to your breeding business that has a single use: e.g. rats that are purchased for food, travel, utilities, bedding, vet care, garbage bags, medicine, and so on, is an expense that can be written off in that year.

2). Anything that you can use long-term: e.g. the snake itself (if purchased), racks, snake hooks and other tools, carts, garbage cans, and so on, can be depreciated.....over several years. If you're writing these off in a single year, you're going to get yourself in trouble eventually.

So, you can't make $20,000 selling snakes, then go buy $6,000 worth of racks and $14,000 worth of snakes and claim you made $0.

It's worth paying an expert to do your taxes for one year. Then you can at least see how it should be done going forward.

FYI, I'm not an accountant, but I've hired many over the years.

You should make sure you pay quarterly taxes if you are using your snakes as an income. The IRS will not let you know right away that they don't like the way you're handling things, and at the end of two years (the usual lag, because it takes time for stuff to get flagged and go through Exam) they'll whack you with all kinds of penalties and interest. As long as you itemize your deductions on your return, you should be able to write off the cost of the parent snakes, as well as the food you feed them, and your setups as long as they are specifically set aside for the business. I was a tax examiner for 10 years so I know a little bit about it. And yes, there are flags and limits. I'm not familiar with most of them any more because it's been 15 years since I retired.
Hope that was helpful and not too confusing.