Good News for Blackberry, Raspberry and Papaya Farmers
For farmers who raise certain crops with a longer pre-productive life (over two years) such as apples, oranges, and other similar plants, one of the tax rules under Section 263A require all of the costs associated with planting and growing this crop until it reaches economic production to be capitalized and then depreciated over ten years. The IRS has a list of these plants which they periodically update.
The IRS just released Revenue Notice 2013-18 removing blackberries, raspberries and papayas from these rules. This means cash basis farmers will now be able to deduct normal growing costs associated with these plants from the time of planting forward. Hard asset costs such as irrigation systems, wells, etc. will still be capitalized and depreciated over their normal life.
Revenue Procedure 2013-20 provides guidance on the timing and procedures to follow in making this change. This should be welcome news for those farmers since accounting and accumulating these costs can provide heartburn to farmers and their accountants.
Paul Neiffer, CPA
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 principal with CliftonLarsonAllen in Walla Walla, 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. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Thanks, Paul, for this important update. It IS good news for many Small Farmers working to keep food variety and quality in our markets. Who would have guessed the IRS would lead the charge. I shared this with some groups on Facebook, making sure there was a link back here and you received proper credit.
Thanks, again,
Ric