By Alison Rice, AgWeb.com Markets and News Editor
The worrisome future for a popular federal tax break among farmers just got a little bit brighter.
Under a compromise deal reached in Washington, the U.S. House of Representatives has approved a proposal that would both expand the expired Section 179 tax deduction from the current $25,000 to $500,000 and extend the break for one year, to the end of 2014. The Senate is expected to vote on the measure next. If approved by Congress, it could go to the White House early next week for President Obama's signature, giving farmers and machinery companies an early Christmas present.
“If the bill gets signed by the President by this Monday or Tuesday, we still have a good three weeks [before the tax year ends on Dec. 31],” accountant Paul Nieffer said on AgriTalk Wednesday. “That gives our farmers a lot more time to get out and find the right piece of equipment. They’re not scrambling to buy a piece of equipment because they know they can deduct it.”
If the measure passes as expected, it would be a win, but also a close shave for farmers and machinery companies.
Section 179 allows business owners to depreciate the cost of equipment in the year it was purchased, rather than spreading it over a period of years, giving farmers a chance for a major one-time tax deduction. As a result, it has created a behavior pattern for farmers’ machinery purchases.
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Posted by Jami Howell