by Willie Vogt
While sliding crop prices may be a big reason farm equipment sales have slumped in 2015, another factor is uncertainty over a popular tax rule that allowed significant first-year write-offs for equipment purchases. Called Section 179, the measure played a big role in equipment buying decisions through 2013, but starting in 2014 when the generous tax provision expired, uncertainty appeared.
The 2014 Section 179 tax extender was passed in late December 2014 giving farmers little time to act on the provision (you have to take position of the machine to claim the deduction). The same happened in 2015, but with a twist. Section 179 has been past retroactive for 2015 with the $500,000 deduction limit (without the measure the limit was $25,000), but this time the rule has been made permanent.
Congress passed the measure early last week, and it was signed into law by President Obama – along with a comprehensive Omnibus spending measure – just before he flew west to Hawaii for vacation.
Farm groups praised the tax extender move noting that this is significant for farmers. The same tax bill also extended the biodiesel tax incentive, but also did not stop import of biodiesel from international sources. The tax bill is a major compromise that offered a range of benefits for different groups. It’s been attacked by some as welfare for businesses, but each side of the Congressional aisle got many provisions they wanted.
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Source: Farm Industry News
