How to handle depreciation of a collection of nut trees not yet fully depreciated and which some of the trees have died and been removed?

[teaman1]

Hypothetical Scenario: I have an orchard of let's say 1200 nut trees I have had for over 25 yrs when I bought the farm. I depreciated the trees for something like 40 yrs as that was the expected useful life of the trees. When I initially added the farm asset, I entered it as one collective item of 1200 trees.

Now I have trees that have died and being replaced by new young trees. As I add a new batch of trees as a new asset of let's say 100 trees, I realize I need to show 100 trees in the original asset as destroyed. The 40 yrs is not over for all the trees so 1100 still need depreciating and 100 need to be shown as "sold for $0" somehow. 

How do I handle this situation? Change the business use percentage downward?

[Cattlerancher · Accepted solution]

Fruit and nut trees use a recovery period of 10 years.

Since the trees died (no sale or salvage price) you would just remove 100 dead trees from the group of 1200.  Then enter a new asset of 100 trees.

Example; If you originally entered a group purchase of 1200 @ $10/tree =$12,000 total cost. You will need to Edit this asset to reduce the tree count and cost. Now 1100 @ $10/tree=$11,000 total cost.

Then enter the new asset of 100 trees @ $15/tree=$1500 total cost.

TurboTax now has preselected categories of different farm assets to pick from for different recovery periods. Fruit and nut trees are included if you are using the Home and Business or Self Employed versions.

Please see the attached page snip below of farm recovery periods;

[teaman1]

Are you suggesting editing the original entry for asset cost and title of the asset? The 1200 trees were originally entered as one line item "1200 Nut Trees" with a cost for the whole group of trees.

[Cattlerancher]

Yes, since it was a group purchase, the original asset quantity and cost will need to be reduced manually. Average your cost for each tree.