Bailout bill provides a little relief for farmers
Equipment and machinery depreciate faster in 2009
Buried within Congress’s bailout bill of October 2008 is a provision that allows new farm machinery to be depreciated in 2009 over five years rather than the customary seven-year asset recovery period. Under the legislation, machinery and equipment used in farm business is eligible for five-year recovery if:
- the original use of the property commences with the taxpayer after 2008,
- the property is placed in service before 2010, and
- the farm machinery and equipment is not a grain bin, cotton ginning asset, fence, or other land improvement [IRC Sec. 168(e)(3)(B)(vii), as enacted by Sec. 505(a), Div. C of H.R. 1424].
Used equipment and machinery purchased in 2009 must still be depreciated over seven years. It is unclear whether this provision is intended as a one-year economic stimulus incentive or if the provision will be renewed in 2010 (and possibly again thereafter).
Contact your CPA for more information.
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