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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Bred Replacement Heifers Qualify for Bonus Depreciation

Feb 09, 2011

We had a reader ask the following question:

"I am new to cattle farming and purchased bred replacement heifers in 2010, can I take the 100% bonus depreciation on them?, as they are "New" (never calved before)? Alternatively, what would be the best type of depreciation method to apply to heifers to maximize my depreciation for 2010 and possibly 2011?"
Heifers that have never delivered a calf before and are newly purchased from a rancher will qualify for bonus depreciation (50% before September 9, 2010 and 100% thereafter until the end of 2011).  The farmer that raised the heifer is sort of like an equipment manufacturer.  The heifer is part of their inventory and once it is ready to be bred, it is now a new heifer ready to be put into use by the cow/calf operator.  It is like the equipment manufacturer building a combine and selling it to the farmer to start harvesting corn.  Thus, the heifer can be depreciated using the bonus depreciation rules in effect based upon the day placed in service (normally the day the heifer was purchased).
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