Tax Reform Series 27 – Depreciation of Farm Property

Plain Language of Change:

  • New farm machinery & equipment MACRS recovery periods are changed to 5 years for property placed in service after December 31, 2017
  • The provision that requires MACRS 3-, 5-, 7-, and 10-year property placed in service after 1988 and used in a farming business to be depreciated using the 150-percent declining balance (DB) method in place of the normally applicable 200 percent DB method is repealed, effective for property placed in service after December 31, 2017.
  • Any property with a recovery period of 10 years or greater which is held by an “electing farming business” that makes an election out of the new rules which disallow the deduction for net interest expense in excess of 30 percent of the business’ adjusted taxable income must be depreciated using the MACRS alternative depreciation system (ADS)

Detailed Analysis of Depreciation of Farm Property

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