The farm bill, also known as the Agriculture Improvement Act of 2018, is a piece of legislation that covers a wide range of programs and policies related to agriculture and food in the United States. One of the provisions of the farm bill is the phase out of bonus depreciation, a tax benefit that allows businesses to accelerate the depreciation of certain assets by claiming a larger deduction in the year they are placed in service.
The phase out of bonus depreciation was originally scheduled to begin in 2023, but the recent passage of the Tax Cuts and Jobs Act (TCJA) has accelerated the timeline. Under the TCJA, bonus depreciation will be gradually reduced beginning in 2018 and will be fully phased out by 2026.
This change could have a significant impact on agriculture producers, who often invest in large capital assets such as machinery and equipment. Without the ability to claim bonus depreciation, agriculture producers may face higher tax bills and reduced cash flow.
One solution for agriculture producers looking to minimize their taxable income is to explore the research and development (R&D) tax credit. This credit is designed to encourage businesses to invest in research and innovation, and it can be a valuable tool for agriculture producers looking to reduce their tax liability.
Alliantgroup is a firm that specializes in helping businesses claim the R&D tax credit. They work with clients in a variety of industries, including agriculture, to identify and document qualifying R&D activities and claim the credit on their tax returns. By working with Alliantgroup, agriculture producers can potentially offset some of the impact of the phase out of bonus depreciation and minimize their taxable income.
In conclusion, the phase out of bonus depreciation under the farm bill is a significant change that could have a significant impact on agriculture producers. One way to minimize the impact of this change is to explore the R&D tax credit and work with a specialist like Alliantgroup to claim it. By doing so, agriculture producers can potentially offset some of the loss of the bonus depreciation and reduce their tax liability. We at MFO USA, have deep relations with the alliantgroup personal. We are happy to walk producers through this process to ensure the process is smooth and efficient. Please feel free to contact us if you have any questions.