One of the more interesting and potentially very beneficial amendments to the Internal Revenue Code as a result of the 2015 PATH Act related to vineyards are the new provisions related to bonus depreciation and the deemed time of placement-into-service to an earlier date for certain fruit bearing trees and vines.

Under the old provision (IRC §168(k)) the allowance of 50% bonus depreciation would only be available in the year the property is placed into service. In the case of fruit bearing grape vines, this would be when the vine becomes income producing (typically a few years after planting).

However, under the new amendment (IRC §168(k)(5)) the rules shifted the deemed time of placement-into-service to a much earlier date. Grape vines now become “qualified property” when planted and are eligible for the 50% bonus depreciation in their first year.

There are other caveats to the new provisions, however generally taxpayers will be allowed depreciation deductions sooner for planted vines.  If you think this may apply to you or you’re interested in hearing more, please feel free to contact us and one of our professional staff would be happy to help you.

Note: This provision only applies to vines planted after 12/31/15 and begins to phase out in 2018.