Tax Credit for Livestock Producers

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R&D credit for Livestock Production

Under IRC Section 41 Livestock Producers Can Claim New Tax Credit

Livestock producers can now claim the Internal Revenue Code (IRC) Section 41 Research & Development (R&D) tax credit for innovating to improve animal health, growth rates, feed efficiency, or breeding techniques. A recent court ruling confirms that on-farm, commercial-scale trials (such as testing feed, vaccines, probiotics) qualify if they meet a four-part test for innovation and technical experimentation.

The U.S. Tax Court issued a ruling saying that innovations in livestock production can qualify for the research and development tax credit, establishing new case law in an emerging field.

In the ruling, issued Feb. 3, 2026, the Tax Court held in the case, George v. Commissioner, that experimentation to improve poultry health, disease resistance and growth rates constituted qualified research under Section 41 of the IRC marking the first time animal agriculture had been legally questioned and recognized for R&D credits. George’s of Missouri, Inc. (GOMI), one of the largest fully integrated poultry producers in the United States processing approximately 3.5 million birds weekly, has been innovating since 1922. After surviving the Great Depression by pivoting from a small grocery store to live chicken sales, the company evolved into a major operation supplying customers including Kentucky Fried Chicken.

Operating on razor-thin margins of approximately one cent per pound of chicken, GOMI relies heavily on data-driven experimentation with growth rates, mortality rates, and disease prevalence to stay competitive. The company partnered with Alliantgroup in 2014 to document these ongoing research activities. The Tax Court validated research initiatives including vaccine and antibiotic trials, probiotic research, genetic line experimentation, and disease prevention protocols. The Court explicitly rejected the IRS arguments that livestock trials constitute mere evaluation of available alternatives and affirmed that the work done by GOMI fully conformed with each test for qualification of the R&D credit.

The Four Part Test

To qualify, livestock producers must pass the Four-Part Test. That means their activities must be:

  • Technological in nature.
  • Intended to eliminate technical uncertainty.
  • Part of a process of experimentation.
  • For a qualified purpose (improved performance, efficiency, or health).

 

The R&D tax credit is designed to encourage businesses, including farms, to invest in R&D activities. For a long time, the term Research and Development was seen as something that only happened in high tech laboratories. In reality, the American farm is one of the most active hubs for innovation in the country. Understanding and applying for the R&D tax credit can seem daunting. Many are unsure if their activities qualify or how to document them properly. If you have questions, contact us and we will help determine your eligibility.