The latest information about 2011 and 2012 Section 179 deductions and Bonus Depreciation tax rules and how they impact farming operations is available at TractorLife.com. At your convenience, you can view a 60-min. webinar and download a PDF of the complete presentation. TractorLife.com is a website that helps farmers maintain and extend the operating lives of their tractors.
During the webinar, presenters Roger McEowen, the Leonard Dolezal Professor of Agriculture Law and Taxation at Iowa State University, and Robert Gunther, CPA and tax specialist with Frost PLLC in Little Rock, Ark., discuss the new tax regulations passed by Congress last December as part of the 2010 Tax Act. Information included in this webinar is valuable to farmers for year-end tax planning.
Section 179 allows farming operations to deduct up to $500,000 (up from $250,000) for new or used farm machinery, single-purpose agricultural structures and qualified real property purchased and put into service between January 1, 2011, and December 31, 2011. The deduction is good for equipment and property purchases up to $2 million. Under current legislation the deduction drops to $125,000 in 2012 and $25,000 in 2013. The equipment purchase phaseout drops to $500,000 and $200,000 respectively.
Bonus Depreciation rates are 100% for 2011 (up from 50%) and cover new equipment only. This accelerates the typical seven-year depreciation write-off. The bonus depreciation will drop to 50% in 2012. In addition, the bonus depreciation applies to farm property with a recovery period of 20 years or less. Newly constructed farm buildings are also eligible, but a building must be used exclusively for farm purposes or the building will be disqualified for bonus depreciation.
The webinar goes into detail about Section 179 and the Bonus Depreciation topics, providing valuable information about qualifying property and equipment, timing issues for maximizing the benefit of the new tax rules, revoking the expense method depreciation for flexibility in tax planning, differences in bonus depreciation allowances from state to state and strategies to maximize the benefits of these new tax regulations.
Farmers can visit TractorLife.com to view the webinar and download the presentations to prepare for meetings with their tax advisors. Professor McEowen and Mr. Gunther both recommend that farmers discuss the new depreciation regulations with their tax consultants before buying new machinery or farm property.