“Bailout Bill” Included Five Year Farm Equip. Depreciation Law

Included in the Emergency Economic Stabilization Act (H.R. 1424), is a law establishing a five year depreciation period for most farm machinery or equipment, as long as it is placed in service between Jan. 1, 2009 and Jan. 1, 2010. (Grain bins, cotton gins, fences, or other land improvements are excluded from the change.)

The North American Equipment Dealers Assn. (NAEDA) said after several years of narrow misses, the law passed under Title V of the $700 billion economic spending bill in Sec. 505. Under the new law, the depreciation schedule for agricultural equipment will be reduced to five years, down from seven years.

Other ag incentives in the bailout bill:
 The bill extends the $1 per gallon biodiesel production credit and the 10-cent a gallon small biodiesel producer credits to the end of 2009. The bill also extends the $1 credit for producing diesel fuel through biomass and makes it easier for renewable-diesel refiners to receive the tax credit. The bill also would retroactively eliminate the controversial practice of “splash and dash” that allowed tax credits to biodiesel producers overseas for simply docking at U.S. ports and blending in diesel fuel.
 The bill adds two provisions for infrastructure in the ethanol industry. One is a tax clarification that would give ethanol pipelines the same tax status as pipelines for other fuels such as gasoline. Another provision extends a 30% tax credit through 2010 for gas stations that install E-85 pumps. Electric vehicle charging pumps were also added to that credit as well.
 Other provisions would impact growers in flood-disaster or hurricane zones. For instance, growers and other businesses could deduct $100,000 more than normal under the Section 179 equipment expensing deduction. The amount of equipment a business could buy under that provision before getting hit with a phase-out of the deduction increases to $600,000 as well. ❖