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Accelerated depreciation ends December 31

Agriculture.com Staff 10/20/2009 @ 2:15pm

Producers have until the end of 2009 to take advantage of two tax credits that were extended this year. “A lot of farmers carried income into 2009 and it’s good to offset some revenue with the bonus depreciation and the IRS Section 179 deduction,” says Michael Williams, vice president of government relations from North American Equipment Dealers Association (NAEDA).

Producers can write up to 50% off of their purchases for the year, followed by a normal depreciation schedule, or to write off up to $250,000 this year through the IRS Section 179. For example with the 50% bonus, if producers buy a combine for $300,000 they can write off $150,000 this year and the remainder balance is set up on a regular depreciation schedule. This deduction is good only for new equipment.

With the Section 179 deduction, producers can write off up to $250,000 this year on new or used equipment. The remainder of the balance would be put on a regular depreciation schedule. Miller says the $250,000 amount is only part of the stimulus package and will return to $130,000 at the end of the year.

Kent Miller, extension Ag econo¬mist with Kansas Farm Management Association SE, cautions the equipment must be in possession of the owner by the end of the year for the tax credits to take affect. “If a producer orders a combine and it’s not delivered until next May he can’t take either bonuses. You must have possession of the equipment,” he says.

The 50% bonus also applies to 20-year life property, such as a machine shed, explains Miller. Producers have to have the structure completed by the end of the year to get the bonus deduction. “If they get it done this year, they can write half off now, and take the other half over a 20 year period,” Miller says. He advises producers to talk with their tax advisers about the matter.

Producers have until the end of 2009 to take advantage of two tax credits that were extended this year. “A lot of farmers carried income into 2009 and it’s good to offset some revenue with the bonus depreciation and the IRS Section 179 deduction,” says Michael Williams, vice president of government relations from North American Equipment Dealers Association (NAEDA).

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