New Liberalized Deduction for Charitable Food Donations by Farmers and Ranchers (Year-end Deadline Applies)

The law includes a special new liberalized charitable contribution deduction rule for donations of food by qualified farmers and ranchers. To qualify, the contributions of food must occur between October 3, 2008 and December 31, 2008.

The maximum charitable contribution deduction for such donations is 100 percent of the taxpayer's adjusted gross income. The amount of such donations in excess of what can be deducted in the current year can be carried forward for up to 15 years. For charitable food donations made during the required time period by a non-publicly traded corporation that is a qualified farmer or rancher, the maximum charitable contribution deduction is 100 percent of taxable income (calculated before any charitable contribution write-offs).

The amount of these food donations in excess of what can be deducted in the current year can be carried forward for up to 15 years. To be eligible for these special rules, the food must be wholesome when it is donated.

 New Five-Year Depreciation Break for Farm Equipment

Most types of farming machinery and equipment are depreciated over seven years. The new law includes a new provision allowing five-year depreciation for qualifying property used in a farm business.

However, this tax break is temporary and limited:

• It only applies to new property placed in service during 2009. Used equipment does not qualify. 
• It is also not available for grain bins, cotton ginning assets, fencing and other land improvements.