Best of TaxLetter: Can I Depreciate My Cat?

A brochure answers a complex question to motivate tax practitioners into buying the advertised book:

"Livestock held for work, breeding or dairy purposes may be depreciated over its useful life subject to an allowance for salvage value. Livestock includes chinchillas, mink, foxes and other furbearing animals. If held for breeding (or draft) purposes, a cat is not inventory. Therefore, assuming the cat meets these tests, the cat will be depreciable unless the catbreeding activity is subject to the passive loss rules, at risk limitations, or the rules denying losses for activities not engaged in for profit. If you sell the cat it will be treated as Section 1231 property, and depreciation will have to be recaptured, unless the disposition is in connection with a divorce. To avoid recapture, it's best to contribute the depreciated cat to charity."

(No. 71)