basic herd

Not for the first time since the financial crisis, investors have followed basic herd instinct.

This definition does not apply, however, for purposes of a basic herd.

"The basic herd stays on the property almost entirely," she said.

This includes harvested farm crops and livestock that is not part of the basic herd.

The beneficiaries are not, however, permitted a basic herd deduction under section 29 for the inherited livestock.

The farmer will be permitted a deduction calculated under section 29 in the year of the rollover of the basic herd.

Animals in a basic herd are defined in subsection 29(3) to include only cattle, horses, sheep or swine.

The basic herds are surrounded by subherds of subordinate males, high-ranking males and females and old or invalid animals.

A farmer who has a basic herd may also elect to roll over the basic herd to a corporation under subsection 85(1).

See the current version of Information Circular 86-6, Basic Herds, for a discussion on basic herds.

Since the cost of livestock of a farmer using the cash method, would, except for the basic herd, have been deducted by the deceased in some year, the cost of the livestock to the beneficiary would normally be nil.

A farmer who has a basic herd is permitted a formula deduction on both an optional and a mandatory basis under section 29 in the year of disposition of any livestock in a basic herd.

Where the amounts included in the farmer's income under subsection 28(4.1) are in respect of animals in a basic herd, an amount may be deducted from the farmer's income under section 29 in respect of these animals.

Proceeds from the sale of livestock, including those animals in a basic herd, are by virtue of the definition of "inventory" in subsection 248(1) considered to be income if a taxpayer is in the business of farming (referred to as "farmer" in this bulletin).

In the case of the basic herd, the cost to the beneficiary will be considered to be an amount equal to the fair market value at December 31, 1971 of the basic herd minus the amounts previously deducted by the deceased pursuant to section 29.

Where under subsection 70(2) the inventory of livestock, including a basic herd, is a right or thing on the death of a farmer, the valuation day value of the basic herd that remains on hand at the time of death may be deducted from the value of livestock included as a right or thing.