Do I need to recapture depreciation on dead fruit trees?

[Sad-ex-farmer]

I bought a fruit orchard in Dec 2014 that had 1000 trees. I depreciated the trees using SL - 10 year life for 4 years. In July 2018 650 of the trees died due to a heat wave (no federal disaster declaration). I gave up and In Nov. 2018 sold the farm for a small loss. Do I need to recapture the depreciation on the dead trees?

[DDollar · Accepted solution]

No, not if you sold the farm for a loss.  Depreciation recapture comes in to play when you sell depreciated assets for a gain.  To the extent that there is a gain, the gain is taxed as ordinary income up to the amount of the accumulated depreciation, and the remainder of the gain is capital gain. Since you sold at a loss, depreciation recapture wouldn't come it to play.

[Sad-ex-farmer]

Thank you so much David!