How Fast Can We Write Off Assets Under Tax Reform

The house had originally proposed allowing farmers and other businesses to write-off all assets in the year of purchase other than land.  However, since the border adjustment provision has now been eliminated as an option, it is likely that farmers will not be able to write-off assets 100% in the year of purchase.  Here is what is being discussed right now:

  • Some type of enhanced Section 179 provision. Under current law, Section 179 is at $500,000 indexed to inflation ($510,000 for 2017).  Sen. John Thune of South Dakota had proposed bumping this amount to $2 million and making bonus depreciation permanent at the 50% level (scheduled to disappear in 2020).  Since past-president Obama had proposed bumping Section 179 to a million, this should have a good chance of happening.
  • Farm machinery is now depreciated over 7 years.  There is some discussion to accelerate this to a 5 year write-off.

Since Section 179 is not an extra deduction but rather an acceleration of depreciation that would normally be allowed over 7 years for most assets, this changes would help small businesses including farmers and not increase the budget deficit by much over the 10 year scoring time period.

We will keep you posted.

  • 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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