Several dairy organizations were among 36 agricultural groups calling on Congress to renew areas of the expired tax code dealing with bonus depreciation and immediate expensing of purchased business assets. In a letter to House Ways and Means Committee chair David Camp (R-Mich.) and Ranking Member Rep. Sander Levin (D-Mich.), the groups asked Congress to address expired tax policies that are of importance to farmers and ranchers.
Among dairy organizations signing the letter were the Idaho dairymen’s Association, National Milk Producers Federation, South East Dairy Farmers Association, Southeast Milk and Western United Dairymen.
The letter asked the committee to focus on tax code provisions such as Section 179 small business expensing and bonus depreciation. Section 179 allows farmers and ranchers to write off capital expenditures in the year that purchases are made rather than depreciate them over time.
“The ability to immediately expense capital purchases also provides an incentive for farmers and ranchers to invest in their businesses and offers the benefit of reducing the record keeping burden associated with the depreciation,” according to the letter.
Section 179 small business expensing provides agricultural producers with a way to maximize business purchases in years when they have positive cash flow. With expiration of the bonus depreciation provision, the maximum amount that a small business can immediately expense when purchasing business assets instead of depreciating them over time reverted to $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,” the letter stated. “Furthermore, we strongly encourage you to reinstate the expired 50% 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.”
The national groups asked the committee to include Section 179 Small Business Financing and the bonus depreciation in a tax extenders package.
The Ways and Means Committee held a hearing, April 8, to examine the worth of implementing a permanent tax policy for employers and difficulties caused by tax policies that often expire and are extended for short periods of time.
One day after the hearing, Reps. Pat Tiberi (R-Ohio) and Ron Kind (D-Wis.) introduced legislation that would permanently let small businesses immediately deduct up to $500,000 of investments in equipment and property. The bill would permanently renew the expanded Section 179 expense thresholds that expired at the end of 2013 and would modify those levels for depreciation.
Sources: Western United Dairymen, National Pork Producers Council