What Happens If Bonus Depreciation Runs Out?!
At the Top Producer Conference, I received several questions for my opinion regarding if Congress will extend bonus depreciation or if they will increase it from 50% to 100% for 2012. President Obama has already proposed increasing it to 100% for 2012, however, a more major issue is what happens if bonus depreciation stops?
In reviewing several of the farmer tax returns that I have been working on lately; I have noticed that most of them are running out of any depreciation except for what they get from placing equipment in service in the current year. Therefore, if Congress suddenly stops bonus depreciation in 2013, many farmers will be in the situation of having little or no depreciation deductions, large equipment loan payments and much higher income taxes. This is what I would call a triple whammy.
I think if they do eliminate bonus depreciation it will be over a couple of years to give the farmer enough time to plan accordingly or there will be an adjustment to Section 179 deduction back to the $500,000 range. However, we are dealing with Congress and the President, so any prediction is not worth much at this point in time.
If you have never been to a Top Producer Conference, you should go. It is both informative and entertaining and is well worth attending.
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.
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