The following information is taken from IRS Publication 225, which is the famer's guide (also provided by @ColeenD3).
Property used in farming business.
For 3-, 5-, 7-, or 10-year property used in a farming business and placed in service after 2017, the 150% declining balance method is no longer required. However, for 15- or 20-year property placed in service in a farming business, you must use the 150% declining balance method over a GDS recovery period or you can elect one of the following methods.
Tax Reform under the Tax Cuts and Jobs Act (after 2017):
The TCJA changes how farmers and ranchers depreciate their business property. Here are changes to depreciation that affect farmers:
- New equipment and machinery is five-year property.
- Used equipment remains seven-year property.
- The 150-percent declining balance method is not required for property used in a farming business and placed in service after December 31, 2017.
As a reminder, you can choose to use the alternative depreciation system (ADS) versus the general depreciation system (GDS) for a lower depreciation amount and more evenly averaged using the straight line method, sometimes a longer recovery period, but not always. It depends on the equipment. The GDS uses an accelerated method.
Please use the chart in the publication provided because it's not optional. If you use ADS, you use the required recovery period, if you use GDS then you would use the required recovery period. Both are based on IRS tax law. The links are provided for your convenience and review if you choose.
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