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New Depreciation Tax Law 2009

NEW DEPRECIATION TAX LAW 2009 Highlights:
AG depreciation life is now 5 years
Previous law required a 7-year depreciation period
This provision is only applicable to 2009 purchases
Bonus depreciation extended until 31 December 2009
Bonus depreciation when combined with the new 5-year depreciation period for AG equipment provides an enhanced depreciation deduction for farmer customers of Deere.
Section 179 deduction of $250,000 extended until 12/31/2009
The American Recovery and Investment Act of 2009 was passed by Congress and signed by the President. This bill extended several tax provisions that are advantageous for John Deere customers. In addition, law changes passed last year increase the speed at which Ag equipment may be depreciated. Ag equipment purchased and placed in service during 2009 will be depreciated over a 5-year period rather than the 7- year period previously required.
This accelerated depreciation schedule for AG equipment is only available for 2009 purchases.
The three provisions listed in the highlights are described below:
Section 179:
The Section 179 deduction of $250,000 has been extended another year until 31 December 2009.
A section 179 deduction is available for both new and used equipment purchases. the cap where this benefit phases out is now $800,000.This means customers who place into service, qualifying assets with a value of less than $800,000 will be able to expense the first $250,000 of such asset purchases during 2009 and depreciate the remaining balance over normal deprecation periods using normal depreciation methods (including applicable bonus depreciation). If more than $800,000 of qualifying property is purchased, the available 179 deduction is reduced $1 for each dollar of eligible property purchased over $800,000.
Qualifying assets would generally be tangible personal property used in a trade or business. Therefore items like land improvements and buildings do not qualify. Generally equipment manufactured and sold by Deere would qualify as long as it is used in an active trade or business.
Deere strongly recommends you consult with your tax advisor to see how these tax saving opportunities applies in your situation.
Customers may also be able to take advantage of the 179 deduction where up to $250,000 of 2009 capital purchases may be written off. The full 179 deduction only applies to customers who acquire no more than $800,000 of equipment during the year. The 179 deduction phases out once purchases exceed $800,000. (See explanation above).