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Returning Member
posted Jun 4, 2019 1:58:56 PM

If i pay someone $30000 to clear land on my farm can i deduct the total $30000 on my tax return as machine hire

i own a farm and had several acres cleared and paid $30000 to have it cleared. can i deduct the full $30000 on my tax return

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1 Best answer
New Member
Jun 4, 2019 1:59:01 PM

You could not deduct it as a usual and ordinary farm expense nor depreciate the improvement to farm land. Land can never be depreciated. This $30,000 would be added to your cost basis in the property.

This is from IRS publication 225 below;

Increases to Basis

Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements having a useful life of more than 1 year.

The following costs increase the basis of property.

The cost of extending utility service lines to property.

Legal fees, such as the cost of defending and perfecting title.

Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements.

Assessments for items such as paving roads and building ditches that increase the value of the property assessed. Do not deduct these expenses as taxes. However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements.

If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. See chapter 7 for more information.

1 Replies
New Member
Jun 4, 2019 1:59:01 PM

You could not deduct it as a usual and ordinary farm expense nor depreciate the improvement to farm land. Land can never be depreciated. This $30,000 would be added to your cost basis in the property.

This is from IRS publication 225 below;

Increases to Basis

Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements having a useful life of more than 1 year.

The following costs increase the basis of property.

The cost of extending utility service lines to property.

Legal fees, such as the cost of defending and perfecting title.

Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements.

Assessments for items such as paving roads and building ditches that increase the value of the property assessed. Do not deduct these expenses as taxes. However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements.

If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. See chapter 7 for more information.