|Farmers and taxes|
|Written by James J. Hoorman|
|Thursday, December 20, 2012 3:27 PM|
The Section 179 tax provision allows businesses to deduct the full amount of the purchase price of equipment (up to certain limits). It can be elected for either new or used equipment purchased in fiscal calendar year of the business. In 2012, the deduction amount is $139,000 but is slated to be reduced to $25,000 in 2013. Farmers can elect to use all or part of the deduction amount. An example would be that a farmer purchases new equipment for $100,000 and used equipment for $75,000 in 2012. They can deduct the $75,000 on the used equipment and $64,000 on the new equipment for a total of $139,000 using Section 179. The $36,000 remaining value of the new equipment would then be eligible for bonus depreciation or be placed on the regular depreciation schedule. Section 179 deductions are limited to the amount of net operating income generated by the farm and cannot be used to create a net operating loss.
To read the rest of this article please subscribe or sign in