Crapo Co-Sponsors Ag Equipment Bill
Accelerated depreciation benefits Idahoâ??s farmers and equipment manufacturers
Washington, DC â?? By modernizing an outdated provision in the tax code, the cost of doing business could be lowered for farmers under a bill co-sponsored by Idaho Senator Mike Crapo, a member of both the Senate Agriculture and Senate Finance Committees. The measure, introduced by Senator Jim Talent (R-Missouri), provides farmers and manufacturers with an equitable depreciation schedule for farm equipment.â??Agricultural production is vital to Idahoâ??s economy,â?? Crapo said. â??Farming requires high capital investments in equipment in order to operate. Farm equipment is generally run for many hours of intense usage, typically from sunrise to sunset during harvests, and often for two or more crops annually. This bill provides a better match with actual farm equipment use patterns; that, in turn, will benefit our farmers and equipment manufacturers and dealers in Idaho.â??Under current provisions of the tax code, which have largely not been updated since 1962, farmers must carry a new piece of farm equipment on their books for seven years. On the other hand, construction equipment, which has a similar useful life span, can be depreciated over five years. Newer farm equipment allows farmers to operate more efficiently, more safely and in a more environmentally-responsible way. By bringing parity to the tax code, farm equipment can be depreciated after five years of operation instead of seven. For example, under current tax provisions, the yearly allowed deduction for a combine, which costs between $200,000 and $300,000 when purchased new, would be between $29,000 and $43,000 over seven years. Under the new law, the farmer would be allowed a depreciation deduction of between $40,000 and $60,000 over five years. These figures are for illustration only; actual depreciation would depend on the taxpayerâ??s actual status.