Can I depreciate the cost of nut trees the rental farmer purchases to replace dead trees with if he has already subtracted their cost off my crop check already?

Forum|Forum|7 years ago
June 4, 2019
2 replies
33 views

I have a farm of nut trees I rent to a farmer. Some have of the trees have died. The farmer at my approval, purchased new trees and planted them where the dead trees were taken out. He subtracted the cost of the trees from my portion of the crop check already. He says they have already been expensed and that I can't depreciate them. I believe they are an asset that can be depreciated for 10 yrs.

What is correct story? Can I depreciate the trees newly planted even though the cost was taken out of my crop check?

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Best answer by Cattlerancher

He may have expensed them but you paid for them by receiving that much less of your agreed share of the crop, so you reimbursed him for the trees. Keep good records to show you reimbursed him. You can depreciate the trees as we last spoke in our previous question but if you are the land lord receiving a share of the crop be sure to use the Farm Rental Income (form 4835) section. It allows for depreciation as well.

Carl

Level 11

Technically, you are the one who purchased them. So I don't see why not, since you own those trees. @Cattlerancher what say you?

CattlerancherAnswer

Level 7

teaman1Author

Level 2

@Cattlerancher Thank you for your responses! I spoke to my farmer (renter of the crop) and he still claims by reducing my crop portion check it's already expensed (written off) and can't be depreciated. My 1099-MISC reported income shows the reduced crop share check amount (after my cost of the trees was taken out). So it does seem that trying to depreciate the new trees cost is trying to reduce my taxable income from this farm twice, once in a lower than reality income amount and again on the depreciation form. It seems he is the one who goofed and should be showing/giving my full portion of crop share, then asking for a check to purchase the trees and pay for the digging out dead /replanting new trees. Then I could depreciate the tree cost and expense the labor charges for digging/replanting. But that's just how I see it. I'm not a tax expert. Please let me know what is the correct way to handle this.