02—Lancaster Farming, Saturday, Decemberl9,l9Bl
Brockett's Ag Advice
(Jm By John E. Brackett
Farm Management Agent
Lewistown Extension Office
Capital Purchases -
Depreciation 1981 Style
Due to the 1981 tax law changes,
depreciation no longer offers the
flexibility to tax planning it once
did.
It is still an item that has some
value, but the range 'in
depreciation that can be used with
new purchases has been severely
curtailed. The new law has pretty
well set the depreciation rates for
all types of depreciable farm
assets. Each item will fall into one
of three predetermined categories
as to depreciable lor cost
recovery ) life.
The new depreciation system is
called an Accelerated Cost
Recovery System. As far as 1 can
tell from the literature, the old 20
percent first year option, both
types of accelerated depreciation,
and the option to set the life of an
item based on historical use are no
longer available. This new law is
craiSrL GROMEIII’S ROY 0. CHRISTMAN
EOtIIPMERT INC. FARM SERVICE rd,
Mechanics Grove Hamburg, PA 19526
Oley, PA 19547 Ouarryville, PA 17566 Ph.(215)562-7218
Ph.(215)987-6277 Ph.(717)786-7318
' G®ll DAIRY
SERVICE U.BYO E. KREIDER "TOEASE
RD 1 Rt. 274 RD 1 OlflLLbU.
V 2 Mi. South Rising Cochranville, PA 523 Willow Rd.
Sun, MD 21911 19330 Lancaster, PA 17601
Ph.(301)658-6923 Ph.(215)932-4700 Ph.(717)299-2536
effective for items purchased since
January 1,1981.
The ACRS method sets the
percentage of the original cost of
an item that can be taken each
year. Thus an item in category 1,
has a recovery allowance
(depreciation) of 25 percent the
tirst year, 38 percent the second
year, and 37 percent the third year.
Category one would include cars,
trucks, and breeding hogs but not
dairy cows. These items would
have a life of 3 years.
A taxpayer can choose to use the
ACRS' straight line method and
select a life of 3,5 or 12 years (not 4
or 7 or 10). In this case, only 50
percent of the straight line annual
depreciation can be used in the
first year. For both the regular and
straight line ACRS methods, it
appears as though the same
recovery allowance (depreciation)
could be used regardless of when in
the year the item was purchased.
a ne w Badge®spr an s Vertoha ''e
f or you. umil Mar h defWork, ng
Category two would include the
i>!ilk of farm assets. All
iiMiclunery, equipment, anti uauy
and breedingiivestock except hogs
(and certain horses) would fit into
this category. Also included in this
category would be single purpose
agricultural structures such as
silos, milking parlors, etc.
Category two recovery
(depreciable) life is 5 years. The
regular ACRS percentages are 15,
22, 21, 21, 21 for the five years.
Again the 15 percent can evidently
be taken regardless of when in the
year the item was put into service.
A taxpayer can use the ACRS
straight line method as with
category 1 items. The straight line
Jives are 5,12 or 25 years.
Category three would include all
multipurpose buildings such as
machine sheds, tenant house, etc.
Cost recovery (depreciation) is a
bit' more complicated for this
category than for the above two. ANNAPOLIS Md - Maryland’*
For these items it does make a AiNiN/vrULilo, mfl. Maryland S
TT “u * “S"®. a 1982 tobacco auction season will
difference as to what month the open March 16 and ran through
S K r M 3? *’ tddhtng it-the earliest in the
may nave to .recalculate gate's history. The season dates
SfSe°"f e SSIS?»a n M e >»•" «** “» M^and
SS2S deSent on when SUtt To^ acco ♦ rttari *» *1 the
percentage aepenuent on wnen it re q Ues t 0 f growers, according to
SecreßrJ A '
h^ S a« T i?«S'SeS“ ,Sht -Bfhdley H. Powers, of .he
hvesareiS JSor« w .Maryland Department of
also aooears the Agriculture ’ s Division of
also appears as though the A g ncultura i Development ,and
Marketing, says the _crop of
tobacco to be sold grown in 1981
is of "excellent quality and will
come m at around 30 million
BUILDINGS ARE
COVERED WITH
REYNOLDS
ROOFING & SIDING
DESIGNERS & BUILDERS of SYSTEMS
taxpayer will have to set the same with a life of 12 years or 25 yt
life and method for all items from you desperately need to mas
a category purchased during a tax write offs, that will be fine
given 'year. This may be a , use the regular AQR&method.'
problem. what if this causes a loss of err
Example: you 7 purchase a of tax free money? Twelve
manure spreader, a tractor, a may be all right on the tracts
dairy cow, and a sUo in-1981. They silo, but would leave a bi
are all in category two. This means depreciated balance for the
that you can either use the regular cow and spreader when those
ACRS method (15 percent were sold,
recovery for 1982, 22 percent
recovery for 1982, etc.}; the
straight line ACRS method with a
life of 5 years (10 percent recovery
for 1981, 20 percent recovery for
1982 thru 1985,10 percent for 1986);
the straight line ACRR method
Mid. tobacco prohibited
Design and Layout your
Specifications
With Site Planning and
Excavation
Draw Plans
Select Materials
Figure Costs
RD 4 EPHRATA, PA 17522
Located In Farmersville
Phone 717-354-4271
in quota states
BUILT BY:
This may possibly be chang,
dairy cows may be moved
Category l status. Or regulati
developed by IKS may not be
stringent as the literatures
terpretation of the law implies.
pounds, which will be up a good
from the 1980 drought reduced
sold at auction in 1981."
High demand and short su)
of quality Type-32 leaf resr
record high prices being pai
the 1981 auctions, with the avt
price at approximately $1.70
pounds.
The 1982 auction season
begin Tuesday, March 16, ai
scheduled to close on Thur
May 6. Sales will be held
Monday through Thursday
Auction sales take place on
Southern Maryland warel
floors located at Wayson’s Coi
Upper Marlboro, Hughesv;
LaPlata and Waldorf.
For All Your
Form Building
Needs, Large or
Small, Let Our
Experience
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