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Raising alpacas can offer the farmer some very attractive tax advantages. In 2003 those benefits got a lot better due to the "Jobs and Growth Reconciliation Tax Act." which was enacted into law on May 28, 2003. It was amended for the 2008 tax year. The new rules added several powerful incentives for people who buy alpacas. The 179 deduction has been raised to $250,000, and it is available thru 2010. In addition, for 2008 only, special bonus depreciation is available. For farms making large capital investments in 2008, this is offers a huge benefit.
If alpacas are raised for profit, all the expenses attributable to the endeavor can be written off against your income. Expenses would include not only feed, fertilizer, veterinarian care, etc., but depreciation of such tangible property as breeding stock, barns and fences, all of which can help shelter current cash flow from tax. Beyond these basics there are several strategic tax advantages for the alpaca farmer.