Barely Legally

Confessions of a Moot Court Bailiff

The Rent-a-Cow Shuffle

If you thought the federal income tax code was convoluted, well, you’re definitely not wrong. In fact, convoluted might be understating the problem. But the states’ tax codes are pretty lousy with hilarity, too. This story from The Atlantic starts out with a few tax breaks that are worth checking out. Apparently, in Alabama, you can receive a $1,000 deduction for building an atomic fallout shelter. Seriously? Who does that incentivize? What kind of crazy survivalist is crazy enough to build a doomsday bunker, but not crazy enough to do it unless he/she gets a small tax break?

Please recall, Dear Reader, the Lee Storey hobby loss kerfuffle, in which I briefly mentioned deductions, why they exist, and how they work. For now, it’s enough to know that deductions lower the amount of income tax a person or business pays, which is handy and desirable, and folks do all sorts of things to get deductions.

Florida apparently offers a deduction for agricultural land users, which shouldn’t really be surprising. Farm subsidies take many forms, and a tax break is just as good as any other, right? Well, sometimes. In this case, whether it’s a subsidy or a tax break is kind of moot. If you run a farm, you get a nice tax break to help out, because in America, we take care of farmers. Like, a lot. Lots of other places do, too.

Now, the silly title for this blog post comes from how you get this deduction. You can apparently designate your land as “agricultural use” by simply letting a cow graze on it. Yep. That’s it. Rent a cow, let it nibble on your lawn, and poof. Instant farmland with instant tax break. And it’s not just retirees from the Northeast that are raking in the savings:

Other beneficiaries of the law have included Walt Disney World ($1.5 million in savings), as well as U.S. Senator Bill Nelson ($43,000 in savings), who keeps about six cows on 55 acres of land near the Indian River, courtesy of a cattle ranching operation that leases the property for free. Like Nelson, some developers simply offer their land to ranchers for no charge. Others, as the Herald noted, actually pay the ranchers – hence the loophole’s nickname, “rent-a-cow.”

The total cost of these abuses isn’t clear, but there are hints that it may be significant. According to a 2006 Associated Press article, the law costs Florida $950 million a year total. Some of the breaks go to legitimate commercial farms. But according to the Herald’s 2005 investigation, more than two-thirds of the loophole’s top 60 beneficiaries in South Florida weren’t farmers.

The law actually does stipulate that “property owners are required to use their land for ‘bona fide’ agricultural purposes” – if your local court has ruled that renting a cow for a single day is a bona fide agricultural purpose, then get yourself down to your local cattle renting emporium. Your local judge just did you a favor by torturing the meaning of the term that means “good faith” and replacing it with “good deal.” Though to be fair, not all judges can be sophisticated jurists like yours truly, the owner of numerous domain names with legal puns in them, like http://lawyersaur.us and http://barelylegally.com. Pity, that.