DeepYield Soil Fertility Study
For fertilizer and lime a farming business buys, Section 180 may apply depending on your facts. We measure nutrient levels at acquisition against a university-research baseline for the agricultural use, and value any excess using USDA data, so you and your CPA have a documented allocation to consider. Fertility already in the soil when the land was bought is not a settled current Section 180 deduction. Any recovery is unsettled, depends on your facts, and is a decision for you and a qualified tax professional. DeepYield does not promise a deduction.
Under IRC §180, a taxpayer engaged in the business of farming may elect to deduct certain expenditures for fertilizer, lime, ground limestone, marl and other materials that enrich, neutralize or condition land used in farming, in the year the expenditures are paid or incurred, instead of capitalizing them.
A free two-year look-back is also available at go.deepyield.com/two-year-lookback.
How the soil fertility study works
DeepYield measures nutrient levels at acquisition against a baseline for the agricultural use, drawn from university research, and values any excess using USDA data, so you and your tax professional have a documented allocation to consider.
Soil fertility studies for farmland buyers
A soil fertility study may help a farmland buyer and a tax professional document nutrients on hand at purchase. Any tax treatment depends on your facts. DeepYield does not promise a deduction.
Sampling is done before any lime or fertilizer is applied to the new ground, so the tests can reflect what was present at purchase, not what is applied afterward.
For your CPA or tax professional
A taxpayer engaged in the business of farming may elect under Internal Revenue Code §180 to deduct, in the year paid or incurred, amounts spent for fertilizer, lime, ground limestone, marl, or other materials that enrich, neutralize, or condition land used in farming, and the cost of applying them. The election applies only to that year, and generally cannot be revoked without IRS consent. It applies to the farmer’s own purchases of those materials for land already used in farming, not automatically to fertility that came with the land.
A person who farms for recreation or pleasure rather than for profit is not engaged in the business of farming. A cash-rent landlord is engaged in the business of farming only if they participate to a material extent in the operation or management of the farm.
Some farmland buyers, with a soil study and a purchase-price allocation, treat unexhausted fertilizer acquired with the land as a wasting asset that may be recoverable over time under §167. That treatment is unsettled and aggressive. No statute, regulation, revenue ruling, or court decision authorizes a current §180 deduction for residual fertility acquired with the land. The only IRS written determination on residual fertilizer bought with farmland, a 1991 technical advice memorandum, denied the taxpayer’s amortization claim: the taxpayer had to prove beneficial ownership, that fertilizer applied by the prior owner was present and measurable, and that it was being used up over a defined period, and did not. Whether any recovery is available, under which Code section, and over what period, depends on your facts and is a decision for you and a qualified tax professional. DeepYield does not promise a §180 election or any tax result. If you later sell the land, an amount attributable to fertilizer or lime included in the selling price may be taxed as ordinary income. A deduction that cannot be supported may be disallowed, with interest and penalties.
Thank you. The useful window is before any lime or fertilizer is applied to the new ground. Book a short soil-study fit call at https://calendly.com/kyle_farmer/deepyield-soil-fertility-study-fit-call. The call is to see whether a soil fertility study may help you and your tax professional document nutrients on hand at purchase. It is not a promise of a Section 180 deduction or any tax result.
A free two-year look-back is also available at go.deepyield.com/two-year-lookback.
Results depend on your specific facts. No outcome is guaranteed. This is general information, not tax advice; advice is provided only under a signed engagement.