Bonus depreciation and Section 179 in the agricultural industry
June 15, 2012
A recent Progressive Cattlemen article delved into the specifics surrounding the 2012 bonus depreciation
allowance, under which qualifying fixed assets
with a tax life of 20 years or less are eligible for 50 percent more deductible depreciation during their first year. As part of the criteria, assets must be new and placed in service by December 31 of this year in order to qualify.
Bonus depreciation can be applied to a number of fixed assets routinely used in the agricultural industry. These include everything from equipment sheds, barns and other farm buildings, which have a tax life of 20 years, to general-purpose vehicles and computers that have a five-year tax life. Machinery, single-purpose agricultural structures and fixed asset
improvements are also eligible.
In contrast, Section 179 - which permits taxpayers to deduct the cost of qualifying property as expenses on their income taxes - can be either new or used. In certain cases, Section 179 may be combined with bonus depreciation to deliver maximized tax benefits.
The accelerated depreciation allowances have been backed by both the Democratic and Republican parties as a way to stimulate the economy as the country continues to recover from the recession.