Ag Equipment Depreciation Amendment Introduced

Sens. Stabenow (D-MI), Roberts (R-KS), Moran (R-KS) and Klobuchar (D-MN) introduced S.700 that would amend the tax code to permanently establish a five-year depreciation schedule for agricultural equipment placed in service after December 31, '09.

Published: April 6, 2011
Updated: June 19, 2011

On March 31, Senators Stabenow (D-MI), Roberts (R-KS), Moran (R-KS) and Klobuchar (D-MN) introduced S.700 that would amend the tax code to permanently establish a five-year depreciation schedule for agricultural equipment placed in service after December 31, 2009. Senators Stabenow and Roberts are the chair and ranking member, respectively, of the Senate Agriculture Committee. See letter urging Senators to co-sponsor S.700.

Current tax law sets a seven-year depreciation schedule for agricultural equipment but construction equipment – which is similar in use and life span to farming equipment – is provided a five-year depreciation schedule. Accelerating the depreciation schedule for agricultural equipment to five years would better align depreciation and debt service which would increase farm income by an estimated $850 million per year.

The United States is the world leader in the production of agricultural equipment, with the industry directly and indirectly employing 250,000 workers.

“This bipartisan effort will strengthen American manufacturing and American agriculture,” Senator Stabenow said. “As Chairwoman of the Senate Agriculture Committee, I’m committed to streamlining and simplifying our nation’s farm policies and finding ways to make existing programs work better. This legislation will encourage farmers and agricultural producers to continue investing in their businesses, creating jobs and strengthening the economy.”

Senator Moran stated, “Common sense dictates that depreciation schedules should match the typical length of debt service for farm machinery. By reforming the tax code, we will better align the code with the realities of agribusiness and support our nation’s farmers and ranchers, who are critical to the success of our economy.”

Senator Roberts added that, “Providing certainty in the tax code by making agriculture equipment eligible for a five-year depreciation schedule makes sense and will go a long way in helping America’s farmers and ranchers invest in their businesses and communities.”

112th CONGRESS
1st Session

S. 700

To amend the Internal Revenue Code of 1986 to permanently extend the treatment of certain farming business machinery and equipment as 5-year property for purposes of depreciation.

IN THE SENATE OF THE UNITED STATES

March 31, 2011

Ms. KLOBUCHAR (for herself, Mr. MORAN, Ms. STABENOW, and Mr. ROBERTS) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to permanently extend the treatment of certain farming business machinery and equipment as 5-year property for purposes of depreciation.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. CERTAIN FARMING BUSINESS MACHINERY AND EQUIPMENT TREATED AS 5-YEAR PROPERTY.

(a) In General- Clause (vii) of section 168(e)(3)(B) of the Internal Revenue Code of 1986 is amended by striking `, and which is placed in service before January 1, 2010'.

(b) Effective Date- The amendments made by this section shall apply to property placed in service after December 31, 2009.