How do I include drainage tile expenses for a farm that I get cash rent for? The farmer sends me a MISC each year.

[IsabellaG]

You would report your Farm income as a rental property. After you enter your income, enter your drainage tile costs as an Assets/Depreciation. Depending on the amount, you may be able to elect to deduct all of the costs in one year rather than depreciate them over time.

You'll need TurboTax Premier Online for this, or any TurboTax CD/Download version.

[srivenkat]

Hello,

I own a 45 acre parcel of Farm land that I rented out to a farmer on cash rent basis. It was in the process of getting transitioned to an organic farm so there wasn't enough revenue that was generated for last year (2018) for the farmer to pay any rent. So there's no income to show for 2018, although he paid about $10,000 as cash rent each of the previous 2 years.

However I did spend about $40,000 to install drainage tile in the farm. When I add this in Turbotax as an Asset under "Land improvements", it says "This asset qualifies for a one time special depreciation deduction of $40,000." and asks me if I want the deduction. When I say yes, it eventually says the loss I can deduct is zero. Will it carry forward this loss of $40,000 to future years until it's exhausted? Will it carry forward the property taxes loss to future years as well?

Thanks.