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$1300! whoa thats a lot of money
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<blockquote data-quote="Arnold Ziffle" data-source="post: 213156" data-attributes="member: 43"><p>Coming late to the discussion, but now that the initial tax filing season has passed I've actually got a little free time, so:</p><p></p><p>I believe Texan is correct as to the depreciable lives to be used for agricultural assets -- and it does make a difference whether you depreciate under the shorter GDS/MACRS lives versus the longer ADS lives. For a complete listing of depreciable lives for various types of assets (not merely those related to agriculture) see IRS Publication 946. However, for assets commonly used in cattle or crop based ag operations I believe the depreciable lives are:</p><p></p><p>Breeding or dairy cattle (cows and/or bulls) -- 5 years under GDS/MACRS and 7 years under ADS</p><p></p><p>Machinery & equipment, fences and grain bins -- 7 years MACRS and 10 years ADS</p><p></p><p>Farm buildings, other than "single purpose" buildings -- 20 years MACRS and 25 years ADS</p><p></p><p>Single purpose ag or horticulture related buildings -- 10 years MACRS and 15 years ADS</p><p></p><p>Land improvements such as drainage systems, roads, bridges -- 15 years MACRS and 20 years ADS</p><p></p><p>And for those folks that are real traditionalists: Draft horses that are 12 years or less of age when acquired -- 7 years MACRS and 10 years ADS (for older horses the MACRS life is 3 years) </p><p></p><p>Generally, ADS may be used as an option to regular MACRS, but in some cases taxpayers must use ADS. Also, under ADS the straight line method of depreciation is required. Although there are situations where it is warranted, most folks don't elect to use ADS since it takes so much longer to write off the asset investment. Now that interest rates are creeping up again the time value of money is becoming a more important concern, much as it was years ago, so generally the sooner one realizes the tax savings associated with an investment the better.</p><p></p><p>I don't know of any statutory support for depreciating cattle (bulls or cows) over 3 years or tractors over 5 years.</p><p></p><p>Clearly, the use of Section 179 can be very useful to effect a great amount of fine tuning of a taxpayer's tax situation. A+, Section 179 is probably what your accountant used in order to essentially deduct 100% of the cost of equipment in the year placed in service, rather than depreciating the equipment over the usual MACRS lives. But the election to use Sec. 179 is made on Form 4562, the same form on which you report all the other depreciation related items. </p><p></p><p>A final note: persistent and demanding clients can at times no doubt prevail upon some H & R Block clerks (and some degreed accountants and CPA's as well) to apply the tax code in an incorrect manner. Of course that doesn't make the resulting tax return correct --- same issue as running red lights -- you may be able to successfully do it forever, but it is also possible that you'll have to pay for your "misdeeds" at some time if they are discovered by the right person. <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /></p></blockquote><p></p>
[QUOTE="Arnold Ziffle, post: 213156, member: 43"] Coming late to the discussion, but now that the initial tax filing season has passed I've actually got a little free time, so: I believe Texan is correct as to the depreciable lives to be used for agricultural assets -- and it does make a difference whether you depreciate under the shorter GDS/MACRS lives versus the longer ADS lives. For a complete listing of depreciable lives for various types of assets (not merely those related to agriculture) see IRS Publication 946. However, for assets commonly used in cattle or crop based ag operations I believe the depreciable lives are: Breeding or dairy cattle (cows and/or bulls) -- 5 years under GDS/MACRS and 7 years under ADS Machinery & equipment, fences and grain bins -- 7 years MACRS and 10 years ADS Farm buildings, other than "single purpose" buildings -- 20 years MACRS and 25 years ADS Single purpose ag or horticulture related buildings -- 10 years MACRS and 15 years ADS Land improvements such as drainage systems, roads, bridges -- 15 years MACRS and 20 years ADS And for those folks that are real traditionalists: Draft horses that are 12 years or less of age when acquired -- 7 years MACRS and 10 years ADS (for older horses the MACRS life is 3 years) Generally, ADS may be used as an option to regular MACRS, but in some cases taxpayers must use ADS. Also, under ADS the straight line method of depreciation is required. Although there are situations where it is warranted, most folks don't elect to use ADS since it takes so much longer to write off the asset investment. Now that interest rates are creeping up again the time value of money is becoming a more important concern, much as it was years ago, so generally the sooner one realizes the tax savings associated with an investment the better. I don't know of any statutory support for depreciating cattle (bulls or cows) over 3 years or tractors over 5 years. Clearly, the use of Section 179 can be very useful to effect a great amount of fine tuning of a taxpayer's tax situation. A+, Section 179 is probably what your accountant used in order to essentially deduct 100% of the cost of equipment in the year placed in service, rather than depreciating the equipment over the usual MACRS lives. But the election to use Sec. 179 is made on Form 4562, the same form on which you report all the other depreciation related items. A final note: persistent and demanding clients can at times no doubt prevail upon some H & R Block clerks (and some degreed accountants and CPA's as well) to apply the tax code in an incorrect manner. Of course that doesn't make the resulting tax return correct --- same issue as running red lights -- you may be able to successfully do it forever, but it is also possible that you'll have to pay for your "misdeeds" at some time if they are discovered by the right person. :) [/QUOTE]
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