I originally thought I would have two options for a piece of equipment I bought last year. Depreciate all in one year or over several years. Which choice is more beneficial? Thanks in advance!

Here are my options

Select an option:
• I'll spread the deduction over several years.
(Recommended if you anticipate having greater income in the future, and want to reduce your te
More
• I'll deduct the full value of the item this year. (Take the Section 179 deduction)
(Recommended if your business is showing a profit.) Learn More
• I'll take a partial section 179 deduction this year.
Additional options available only if the original use of the property begins with you.
• I'll take a partial section 179 deduction this year and the 80% special depreciation allowance .
• I'll take the 80% special depreciation allowance and spread the remainder over several years.

it really depends. If you are not going to have to pay anything in this year it is probably better to spread it out. If it can keep you from paying in it might be better to take it all now.

^^this. If you have significant income in 2023, then it may be worthwhile to take the 179 deduction. But if your farm income is pretty predictable and steady, it could make more sense to depreciate over a term of years.

I appreciate the advice! The 80% special depreciation is confusing as well as the 179 deduction. So to spread it over several years the answer is the first option? What exactly is the 80% special depreciation?

Thanks

We always take 100% the year of on our new farm equipment purchases. Especially since the farm isn’t our main source of income it helps offset the rest of our tax debt.

Likewise, although there are limits to how much of a loss we can take depending on the amount of other income we have. We can carry the loss forward just like capital losses in stocks, but are subject to limits each year. If you can take it all in one year, there's something to be said for that.