Cows & Spec.Depreciation

[Gretel]

If a farmer buys cows in December that are bred already, he does not have the original use and cannot claim the special depreciation, right?

[Snaggletooth]

Original Use?

the definition of "original use" may break down in a situation such as this. Intended to limit its use to "new" equipment.

If you need to use bonus depreciation and believe the "original use" feature may cause problems, you can use section 179 to whatever extent you desire, except you are limited to the profit on the Schedule F. And I have seen very few occasions where it would be wiser to overkill the deduction instead of saving some of the depreciation for future farm operations.

[Gretel]

Thanks, Snag, you bring up an important point I did not have on mind. I know Sec.179 can only be claimed up to income. This taxpayer has plenty of W-2 income in addition to this farm. Taking Sec.179 would create a loss by that deduction but as long as I have enough earned income I still can claim Sec.179, right.

I am playing with 2 years, one of them being high on the EIC if I claim Sec.179.

[DaveO]

My opinion is that heifers that are intended for breeding are available for bonus but now bred cows. Bonus or special depreciation is limited to items for which this was the first use of their intended purpose. Seems to me that bred cows have already been used for their intended purpose.

[buzzardbreath]

Intended Purpose

Not taking a position as to the legitimacy of special depreciation on bred heifers, but I will disagree that breeding fulfills the intended purpose. The intended purpose is calving, not breeding.

I did not know W-2 amounts could be added to farm income to accommodate additional earned income for section 179.
I didn't think this could be done, but again I've been wrong before...

[TAX4US]

In some states you cannot have the bonus. Therefore if you use bonus you will always be adjusting for bonus, substraction, and addition on the states. I really don,t feel it's worth it unless you can't get enough of 179. nuff said I tired.