Agribusiness BlogFarm CPA Today

Bonus depreciation extended to 2009

The recent Stimulus Tax Package includes an extension of bonus depreication from 2008 into all of 2009.  This means that for all 07_37_13_thumb1new equipment (including single purpose ag buildings) qualifies for 50% of the cost being deducted in 2009 with remainder being depreciated over the normal tax life of the equipment.

For example, if a farmer bought a new tractor for $150,000 in 2009, the old law would have allowed a normal depreciation deduction of about $16,000.  Under the new law, the farmer can deduct $75,000 plus about $8,000 for a total of $83,000.  There is no income or cost limits on this deduction.

Also, the new law has extended the $250,000 limit on Section 179 expensing to any taxpayers whose year starts in 2009.  This means that the purchase of qualifing equipment (does not have to be new) can be fully deducted up to $250,000.  This amount is  phased-out once your equipment purchases start to exceed $800,000.   There are other limitations on this deduction, so make sure to check with your tax advisor.

I will pass on some of the other tax goodies from the Act in later posts.

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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