How do I depreciate an AVA valuation over 15 years using schedule F?

[jeremytaxwalker]

It is for a vineyard property in an AVA region.  A vineyard tax expert told me I use schedule F for this depreciation, but when I tried to enter it under assets, TT depreciated it over 39 years in stead of 15. How do I make it 15 years?

[PatriciaV]

Per IRS Pub 225, Table 7-1. Farm Property Recovery Periods, the recovery period for trees or vines bearing fruits or nuts is 10 years (see IRS Pub 946 Which Depreciation System (GDS or ADS) Applies?). Vines are also included in Special Depreciation, which would allow you to deduct the full cost this year.

Please review your entries for this asset to be sure you categorized it properly. When you reach the final page, TurboTax will provide the current year estimated depreciation with a box to Show Details. Check this box to review the factors used for your asset. The Asset Category should be "V-Trees or vines bearing fruit or nuts." Years to fully depreciate = 10 years, with 100% Business use. 

However, if you have good authority for a different recovery period, you can enter your asset under a miscellaneous category and provide the depreciation method. Take note that if you do not fully understand your entries and can produce evidence for using this method, you should consult a local tax expert before proceeding.

1. At the beginning of the Add an Asset interview, choose "Intangibles, Other property" under Describe This Asset, then Other asset type. 
2. Enter a description, the Cost and the date the vines began to produce.
3. Check the boxes for "I purchased this asset" and "Yes, I've always used this item 100%..." then enter the same date.
4. Use the drop-down to choose a 15 year Asset class.
5. Use the next drop-down to choose a Depreciation Method (generally Straight Line).
6. Vines are not listed property, so answer No to that question.
7. Since Vines are included in Special Depreciation, you can check the box at the bottom for "I'll take the 100% special depreciation allowance," if this is your choice.
8. Otherwise, check the first box for "I'll spread the deduction over several years."
9. On the final page, check the box to Show Details and review your entries.

[jeremytaxwalker]

If I need to amortize it, instead of depreciate it, does that make a difference in how I enter it?

It's not the vines that I'm depreciating (although I need to do that too), I was asking about the AVA valuation.  This is the value of the vineyard acreage resulting from the fact that it is in an AVA region, as designated by the TTB.  (https://www.ttb.gov/wine/american-viticultural-area-ava).  It's an amortization of the purchase cost.  This is able to be amortized.  I think I used the wrong word in the prior question....I don't think it's depreciated...I think it's amortized instead, but I'm not certain, and I don't know if that makes a difference.

[PatriciaV]

Yes, you would enter the AVA Valuation as an Intangible Asset under the depreciation section. TurboTax uses this section for assets that are amortized as well.

[jeremytaxwalker]

Thank you. 

The vineyard tax professional also told me that vines, terracing, etc, were fully depreciable in the first year using Schedule C.  However the AVA valuation needs to be amortized over 15 years using schedule F.

In TT, how can I enter expense for vines, and tarracing, etc, in schedule C for full depreciation this year?

[PatriciaV]

You can enter those assets under Income & Expenses >> Self-employed income and expenses. Add or Edit a business and follow the prompts. Look for the Assets section under Expenses. If you wish to fully depreciate, you may use Special Depreciation, which will expense your full cost this year.