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Wayne Brasch
Wayne Brasch, Accountant and Business Consultant
Category: Tax
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Experience:  Master of Science in Taxation. Tax experience since 1963.
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ATV deductions for working farm

Resolved Question:

I own and operate a farm for profit. I purchased 3 ATV's over the past 3 years that I exclusively use for work on this farm. Can I put all 3 ATV's "into service" in 2006 and deduct the entire purchase price for each under section 379?
Submitted: 7 years ago.
Category: Tax
Expert:  Wayne Brasch replied 7 years ago.
You must mean Section 179, not 379. All 3 of the ATVs may be "put into service" in 2006 if they, in fact, are all used exclusively for work on your farm. The problem may be if IRS were to audit your return and found that they were purchase over the past 3 years, they may wonder why they are just now being "put into service". You can depreciate these ATVs, but there may be limitations to keep you from deducting the full cost of all of them. One of those limitations applies to the profit from the farm.
Customer: replied 7 years ago.
This is the first year we've shown any kind of profit on the farm, and therefore the first year we'll include it in out taxes. I realize we *should* have been deducting expenses from the start, even before we showed a profit, but we didn't. Do you feel the IRS would be ok with this scenario for the ATV's? And can we use the full purchase prices for each of them, or must we use their current value for the section 179 deduction?
Expert:  Wayne Brasch replied 7 years ago.
You could go back and amend returns for the prior years and depreciate each ATV in the year it was purchased thereby increasing those year's farm losses and getting money back from those amendments, if you want to do that. IRS will not be OK with this scenario if they audit your return and if the revenue agent realizes the years these ATVs were purchased. That is two really big ifs. You are supposed to use the lower of cost or market value on those ATVs purchased prior to 2006.
Wayne Brasch, Accountant and Business Consultant
Category: Tax
Satisfied Customers: 1298
Experience: Master of Science in Taxation. Tax experience since 1963.
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