Two major investment incentives are set to expire at the end of the year. These incentives offer tremendous opportunities for those in the market for horses, equipment or other farm additions.
100% Bonus Depreciation – write off the entire cost of new qualified depreciable property if the property is put in service before 1/1/2012. Property is new if its original use commences with the taxpayer. Examples of new property include new tractors/farm equipment, yearlings and barns.
$500,000 Expense Allowance – write off the cost of new or used qualified depreciable property, up to $500,000, if the property is put in service before 1/1/2012. This year it is more applicable to used property since 100% bonus depreciation covers new property. An example of used property is a broodmare (pregnant or barren) because her original use was for racing. The buyer of a pregnant mare simply puts her in service upon purchase; the buyer of a barren mare must prepare her in 2011 to be bred in 2012.
To take advantage of either incentive, the taxpayer must purchase the qualified property and place it in service prior to 1/1/2012.
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