Question

placing inherited used farm equipment into service and calculating depreciation

Forum|Forum|5 years ago
March 9, 2021
1 reply
0 views

my wife and her siblings inherited a farm in 2018. They formed an LLC in late 2019. In January of 2020 all the siblings placed the inherited (used) farm equipment into service with the LLC. I can determine the value based on the inventory of the estate. Is this equipment depreciated over five years?

TurboTax Business Windows

ColeenD3

Farm equipment asset life

Purchase of new farm equipment will be depreciated over five years and used equipment will be depreciated over seven years. In old tax law, all farm equipment was depreciated over seven years. Also, all farm assets will be depreciated using 200 percent double declining balance compared to 150 percent double declining balance in prior tax law. No change in depreciation life for machine sheds tiling, vehicles or grain bins/facilities.

You will not need to worry about past depreciation on your inherited property. You will just use your stepped up basis (FMV of property on date of inheritance) and this new basis will be used for depreciation. You will be able to depreciation these inherited assets in full over the property's useful life.