Weigh-up Cow Prices are Up, Way Up!

By: Aaron Berger, Nebraska Extension Educator

Weigh-up cow prices have increased dramatically over the last two years and are now currently at prices that are close to double the average price of what they were just 3 years ago in 2022.  To put this in perspective, the average annual weigh-up cow prices per CWT were $60.05 in 2020, $65.40 in 2021 and $76.12 in 2022, as reported by USDA Market News at the Joplin Regional Stockyards in Missouri.  This chart by the Livestock Market Information Center shows just how dramatically market prices have increased. 

Income from Breeding Stock Held for More than Two Years is Taxed as Capital Gains 

For folks who are marketing home raised cows that are more than two years of age, make sure that the income from these cows is identified as capital gains income when it is being reported for tax purposes.  This is especially important this year because many cow-calf producers will also have excellent income from the sale of weaned calves and yearlings. Capital gains income is not subject to self-employment tax, and the federal capital gains tax rate will be lower than the ordinary income tax rate for the same level of earnings. 

Breeding Stock Purchased in the Past are Selling for More than their Purchase Price! 

For breeding stock that that were purchased and have been held for more than two years, any depreciation recapture that occurs at the time of selling is taxed as ordinary income.  For cows that were purchased and are now being sold at a higher price than what they were bought for, the net difference between the sales price and purchase price is taxed at a capital gains rate.  The current situation is unusual in that many bred heifers or cows, purchased more than two years ago, bring more total dollars today when sold as weigh-up cows than what they cost when they were purchased as breeding stock! It is important for producers to work with tax preparers to make sure that cattle sales are classified correctly, and any capital gains income is correctly identified and taxed as such, to minimize tax liabilities. 

Source: Article by Aaron Berger, Nebraska Extension Livestock Educator.