Irrigation Systems – Is that 7 or 15 Years?

We got the following question:

“Can you blog about how irrigation systems and their components might be expensed or depreciated if purchased in 2014?”

Irrigation systems can be depreciated over either a 7 or 15 year period.  The key rule regarding whether it is 7 or 15 years is based on whether the system is located above or below ground.  The parts of the irrigation system located below ground (well, main lines, etc.) are depreciated over a 15 year period.

Irrigation components that are held above ground (pivots, wheel lines, etc.) are depreciated over 7 years.  A drip irrigation system that is composed of both below and above ground components has been found to be 15 year property, even though part of it is above the ground.

Since all irrigation systems are 15 year or less property, it will qualify for both Section 179 and 50% bonus depreciation (assuming that tax extender bill passes soon).