Napa Valley Register – “Vintners may get tax break: Thompson looks to close loophole affecting vines, orchards”

Washington, D.C., Jun 9, 2009 -

Rep. Mike Thompson, D-St. Helena, has introduced a bill that would extend tax cuts to vintners and orchard farmers under the federal stimulus package.

The American Recovery and Reinvestment Act includes a tax break to help businesses, including farms, recover the cost of new capital investment. However, the bill does not cover permanent crops such as vines and fruit and nut trees because they are not harvested within the first year after they are planted.

Thompson’s bill — co-written by George Radanovich, R-Mariposa — would allow vintners and orchard farmers to receive tax breaks under the federal stimulus package as long as they had planted their crops in 2009.

“Tree and vine farms provides tens of thousands of jobs in California, and like other types of American farms already included in the stimulus bill, they are struggling in this tough economy,” said Thompson, co-founder of the Congressional Wine Caucus. “It’s only fair that farmers who plant long-term crops like grapes have the chance to do their part in turning our economy around. By extending this tax break to include trees and vines, we’ll give them that chance.”

Under the terms of the American Recovery and Reinvestment Act, property bought and “placed in service” in 2009 is eligible for 50 percent bonus depreciation in 2009. Permanent crops such as trees and vines producing fruits, nuts or other crops that are planted in 2009 are not considered placed in service until the harvest of their first commercially harvestable crop. In other words, even if they are planted in 2009, they are not eligible for bonus depreciation.

In an effort to encourage farm investment, Thompson and Radanovich’s bill would change the “placed in service” date for permanent crops to the date on which the crop is planted, making vintners eligible for bonus depreciation.