Farm CPA Report

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Farm CPA Report
Farm CPA Report
The Drawbacks of Bonus Depreciation

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.

Paul Neiffer's avatar
Paul Neiffer
Oct 27, 2023
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Farm CPA Report
Farm CPA Report
The Drawbacks of Bonus Depreciation
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an aerial view of a tractor and a combine in a field
Photo by Loren King on Unsplash

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.

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