Section 179 Tax Provision
April 11, 2014

The American Sheep Industry Association joined other agricultural groups in commending the House Committee on Ways and Means for embarking on its thoughtful approach to address expired tax policies (i.e. tax extenders) that are very important to farmers and ranchers.

Agriculture requires large investments in machinery, equipment and other depreciable assets and, because of this, farmers and ranchers place great value on tax code provisions such as Section 179 small business expensing and bonus depreciation. Section 179 allows them to write off capital expenditures in the year that purchases are made rather than depreciate them over time.

Section 179 small business expensing provides agricultural producers with a way to maximize business purchases in years when they have positive cash flow. Under the expired law, the maximum amount that a small business can immediately expense when purchasing business assets instead of depreciating them over time is $25,000 adjusted for inflation. We strongly encourage you to restore the maximum amount of expensing under Section 179 to $500,000 as it was previously set in 2013. Furthermore, we strongly encourage you to reinstate the expired 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment. We are concerned that the failure to renew these expired provisions of the tax code will place additional burdens on farm and ranch families who are asset-rich and cash-poor and already face an unpredictable tax code that encourages the breakup of multi-generational farm and ranch operations.