A provision in the tax legislation before Congress allowing companies to depreciate 100% of their asset investments in 2011 should be particularly beneficial to farmers looking for a tax shelter next year on record profits expected from crops, says J.P. Morgan in a report to investors.
The firm cautions though the spending spree on capital equipment could be less than anticipated. Larger farms typically replace machinery on short cycles to begin with, so the accelerated depreciation might be of limited value.
Commercial trucks and automobiles also depreciate quickly.
Nevertheless, J.P. Morgan predicts the accelerated depreciation could be a big incentive for the equipment rental industry, which has delayed equipment purchases in recent years because of the slump in the construction sector.