AbstractPast studies have indicated that returns from beef production are not enough to justify economically the current prices of cattle ranches. It has been hypothesized that federal income taxes influence current ranch prices. Standard economic budgets are converted into tax budgets for use in testing this hypothesis. The procedure and assumptions involved in the analysis are briefly listed. Although tax savings can be substantial under specific assumptions, the general effect of ranches as tax shelters cannot be large enough to affect greatly the general level of ranch prices.