Sep 21, 2014
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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.

For Building to Qualify for 100% Bonus Depreciation It Must Be Complete in 2011

Dec 23, 2011

We had a reader ask the following question:

"I put a deposit on a building in Nov 2011 thinking that it would completed and paid for by 12/31/11. The builder has not started the building yet and says it will most likely be completed mid January. What can i do to get the 100% cost deduction for 2012? Could I just pay for it now, or does it have to be 100% complete by 12/31/11?"

In order for a farmer to construct a new farm building in 2011 and be able to take 100% bonus depreciation on the building, it must be completed by December 31, 2011.  Usually having the occupancy permit that shows the completion date on or before that date will be sufficient, but in several states, the local county does not issue occupancy permits on many farm buildings.

In these cases, I would try to take photos of the property and get them date stamped and put in some type of file showing that the building was completed.  To prove the date, etc., you may want to hold up a copy of the local newspaper showing the date so that there is no question on what date the photo was actually taken.

In this case, since the construction will not be finished by year-end, then 50% bonus depreciation will apply in 2011, not 100% bonus depreciation in 2011.  There might be a chance that the construction is of two separate buildings.  For example, a machine shop may be one building and a shop located next to the machine shop may be a separate building.  If one is done in 2011, it would qualify for 100% bonus depreciation, but this does not appear to apply here.

Merry Christmas to all of our readers and we wish everyone a Happy New Year!

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