2-10 IAT 179 Trickle

Changes in tax codes can have ripple effects from farmers all way to farm equipment dealerships.

I had a recent conversation with CPA Jerry Brown who owns and operates a 3,600-acre dry land and irrigated farm so he knows about farming and taxes. Jerry says there is going to be a reduced section 179 deduction which will impact farmers in terms of what they can deduct. "The Section 179 deduction is where an individual can buy a piece of equipment such as a tractor and in 2013 he could write up to $500,000 worth of the purchase of that new equipment off in one year. In 2014 that amount is being reduced from $500,000 down to $25,000.In my mind that is a way of punishing the people who produce food in America. What is the thinking behind that? To give you some history on 179, the deduction started out at $25,000. Congress has tweaked the law over the years mainly to enhance the economy. It doesn't just apply to farmers, it applies to anyone who buys equipment throughout the nation. So periodically, Congress will raise the limit in order to entice people to buy equipment which sort of spurs the manufacturers along. I talked with my equipment dealer and he is quite concerned about what this might do to his business. Some people will continue to buy the tractors and combines that they need but they may not buy it quite as quickly as they otherwise would. If they had a good tax year, this the direction would enable them to get their taxes down a little bit and possibly by a tractor earlier than they needed to be buying it.