Treatment of vineyard costs
Good news for the wine industry
According to the IRS, vineyard costs including land preparation, labor and rootstock can be expensed under section 179 in the year in which the vineyard is placed in service (producing a marketable crop.) Land, which is not depreciable, does not qualify for depreciation or the special deduction.
(Amounts expensed may be subject to limitation by other provisions of Section 179.)
In plain English, amounts you spend for these purposes can be deducted for tax purposes in the year in which the crop is marketable, rather than depreciated over the life of the assets.
Action to take
Vineyard costs include land preparation, labor, rootstock and planting. Make sure to keep track of these costs in sufficient detail so they can be capitalized until the vines “reach an income-producing stage” and qualify for the section 179 deduction.