As winter nears in the north (there's even a threat of snow this week where I live) it's a signal that the year is coming to an end - the tax year that is. And if you're able to take advantage of the higher crop prices you may find yourself with the opportunity to keep on upgrading your equipment while lowering your tax burden.
Tax Expert Darrell Dunteman, who writes Farm Tax Saver notes in a special report that's appearing in our magazines that the handy Section 179 expense method of depreciation has been bumped up to $500,000 for 2010 and 2011. That's a healthy sum designed to entice businesses to invest and upgrade technology.
For all the years I've written the print version of this column, and lately the online version, I've discussed the buying plan. That's an analysis of the technology and equipment you're using on the farm that can be used to create a logical replacement schedule.
The Section 179 write-off is an enticement - when it makes sense - to bring in new gear for your business. But it's also a conversation starter. What should you replace? How do you look at new technology for the business and incorporate it in ways that make sense?
This year major equipment manufacturers are ramping up efficiency and power like never before. Whether you're talking big-power Agco Challenger tractors or that new 600-horsepower Steiger model from Case IH; it's clear there's some big iron out there to help you boost efficiency.
A lot of times that "buying plan" is probably something in your head. You know what's wearing down, what's depreciated off the books, and what might need replacing. But today's modern business - farm or otherwise - looks at capital investments in ways that can enhance productivity and profitability. Whether you're talking new iron or a revamped farm computer system, late fall is a good time to have those conversations with suppliers.
And you'll want to consider the tax ramifications. Check out Duntemen's Story and talk to your tax adviser before the year ends.