Bonus depreciation in the agriculture industry
October 26, 2011
The 100 percent bonus depreciation
allowance on new fixed assets
acquired and placed in service after September 8 of last year will expire on December 31, 2011, pending further legislation that's likely to extend it.
Farmers who have fixed assets that include qualified new equipment and buildings built or purchased this year are among those who can take advantage of having extra funds available, which is intended to stimulate the purchase of new equipment. However, AgWeb notes that state laws about accelerated depreciation schedules
vary. In fact, only 12 states actually follow the federal rules while 29 do not allow any form of bonus depreciation at all.
Specifically, Alabama, Alaska, Colorado, Delaware, Kansas, Louisiana, Missouri, Montana, Nebraska, New Mexico, North Dakota and Utah allow both the 100 percent bonus and the 50 percent bonus, while Illinois allows 100 percent but not 50 percent.
The 29 states that don't allow either include Florida and New York. For those, the back bonus must be added and the Modified Accelerated Cost Recovery System must be used.
Minnesota Democratic Senator Amy Klobuchar and California Republican Representative Wally Herger recently proposed permanently decreasing the depreciation rates
of agricultural equipment by two to five years, citing economic benefits.