The Drawbacks of Bonus Depreciation
We had a reader reach out to us with an example of how trade of farm equipment is becoming more problematic.
We had a reader send us the following example regarding larger farmers trading in farm equipment:
“For example, equipment with a $3.5M trade value replaced with $4.0M of new equipment. Considering 179 limitations and 80% bonus deprecation. Trying to deduct the trade differential but with 80% bonus don’t think I can. Plus end up owing state taxes if state is not following federal bonus. Thought of leasing but think I would owe taxes on my trade in value.”
There are several issues here and we will try to address them all.