Page 13 - MWC 10-5-2023s

Will you Capitalize on The Midwest Cattleman · October 5, 2023 · P13

Increasing Cow Value?

By Aaron Berger, Nebraska Extension Beef Educator
What a difference a year icant advantage when com-
makes when it comes to cow pared to calf or yearling sales
prices! Whether it is weigh which are taxed as ordinary
up cows at $1.10 per pound income.
or young bred heifers and For a married couple filing
cows pushing $2,500 - $3,000 jointly in 2023, the federal tax
per head, the recent rise in rate is 0% on capital gains in-
prices has been dramatic. come up to $89,250 and it is
Many cow-calf producers will taxed at 15% for income from
sell calves this fall and make
a solid profit. For areas that continued on page 14 One of the possibilities current market conditions present is the opportunity for cow-calf
producers to capitalize on increasing cow value. Photo credit Troy Walz.
have received rain and forage
is available, this will encour-
age retaining of heifers and
the rebuilding of cowherds
that have been reduced due
to drought. The motivation
of many will be to keep and
acquire as many bred cows
as possible to produce more
high dollar calves.
One of the possibilities
current market conditions
present is the opportunity for
cow-calf producers to capital-
ize on increasing cow value.
Young and middle aged, bred
cows are in high demand by
the market. Is there an op-
portunity to sell bred cows in
the next two to three years
and capitalize on these strong
cow prices? What is the esti-
mated depreciation that will
occur with current 4, 5 and
6-year-old cows in the herd
over the next two to three
years based on their expected
market value as a bred cow
this fall and winter? When
the projected cost to carry
those cows is calculated with
expected depreciation, death
loss and interest, will antic-
ipated calf prices cover those
costs and still make a profit?
What will it look like if the
market should decline?
Selling home raised bred
cows offers the opportuni-
ty to take full advantage of
the fact that all income from
those cow sales is taxed as
capital gains income. When
raised heifers and cows in-
tended for breeding purposes
are sold and they are older
than two-years of age, those
sales are taxed at a capital
gains rate. For females that
were bought, only the ap-
preciated value above the
purchase price qualifies as
capital gains income. The
reduced tax rate on capital
gains income can be a signif-