Discussion:08 Farm Building Depreciation
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Discussion Forum Index --> Advanced Tax Questions --> 08 Farm Building Depreciation
Discussion Forum Index --> Tax Questions --> 08 Farm Building Depreciation
| April 22, 2008 | |
| Haven't even had dust settle yet and have a farm client call about putting up a new machine shed. Someone (banker) told him that he would be able to 179 this expense for 2008 taxes. Has anyone heard anything about special allowances for this next year? The bankers other great plan was to lease to own. That way he would deduct the lease payments this year and after buyout depreciate the payout amount. Haven't been able to find anything about 08 farm rules. Any suggestions? | |
| 22 April 2008 | |
| Check out the 2008 economic stimulus package and the 50% bonus depreciation. Unless single purpose, farm buildings are generally depreciated over 20 years. For 2008 only, they would be eligible for the temporary 50% bonus but not section 179. | |
| April 23, 2008 | |
| So, now this banker says that a machine shed is a single purpose building because it holds equipment used to house, feed or raise the livestock. My interpretation of this is that it must be used to hold food and such equipment that would facilitate this not farming equipment. The other exception is that it hold fugiable commodities ie a grain bin or silo. This would qualify for the 50% but the farmer would like to expense it all. Anyone have any other intrepretations of this they could share that would help my client? This banker is driving me nuts. He wants the farmer to borrow money from him to do this so is pushing pretty hard. | |
| 26 April 2008 | |
| I love it when the local banker, feed store manager, or equipment dealer starts playing accountant. Of course, they're always right and I'm the one that has to pull out the code and regs to justify my position because their answer, although wrong, is the one the client wants to hear.
The banker is only using 1/2 of the definition of a single purpose agricultural structure. Read page 38 of Publication 225. The structure must be specifically designed, constructed, and used for BOTH the following reasons. 1) To house, raise and feed a particular type of livestock AND 2) To house the equipment needed to house, raise, or feed the livestock. In short, the livestock AND the equipment have to reside in the same structure. And this structure can't be used to house anything other than this livestock and related equipment without some significant modification to the structure. This definition will catch 99.9% of your single purpose agricultural structures. The explantion that in Pub 225 says that the facility must include, as an integral part of the structure, equipment necessary to raise, house, and feed the livestock. In short, the building must be built and equipped in a way that it can only be used for a single purpose. Your standard machine shed that houses everything from the planter, to the tractor, to the feed grinder, to the combine, can be used to produce feed for a variety of animals, not a particular type of animal. Also, this equipment is not an integral part of the machine shed, meaning it's not attached to the machine shed in a permanent, or semi-permanent manner. Parking the tractor and grinder in the shed is different from having farrowing crates, a feed system, and a flush system installed in a farrowing house which is built solely for the production of hogs and that's all it can be used for. Stick to your guns, the banker is wrong. If you want to now my ag credentials, check out my picture on my usepage. | |
