Soil Fertility Deduction

When a client buys or inherits farmland, part of the price pays for the fertility already in the soil — and whether that value can be recovered as a deduction is one of the least-settled questions in farm tax. The authority is thin and decades old, no court has ruled, and promoters have blurred how the deduction is even named. Advisors to buyers and estates of agricultural land increasingly field the question and need a position they can defend, not a sales pitch. This course builds that position: how the fertility is valued against the land, how its cost is recovered as the nutrients deplete, and how it is treated when the land is sold or passes at death.

By the end of this course, participants will be able to:
1. Distinguish residual soil fertility acquired with farmland from routine annual fertilizer inputs.

2. Determine the deductible value of acquired residual fertility using an agronomist’s analysis and the fair-market-value allocation method.

3. Apply the depreciation framework to acquired residual fertility, including recovery period, method, and bonus eligibility.

4. Evaluate the consequences of disposing of farmland carrying a residual-fertility deduction.

Course Lessons

Paul Neiffer is a nationally recognized expert in agricultural taxation and financial strategy. A seasoned instructor, author, and speaker, Paul trains thousands of CPAs and tax professionals each year on complex farm tax issues, estate and succession planning, and ag accounting. He authors The FarmCPA Report blog and a monthly column for Top Producer magazine, and hosts The FarmCPA Podcast. Quoted by The Wall Street Journal, Bloomberg, and Tax Notes, Paul has been instrumental in shaping national farm tax policy, including the Section 199A “grain glitch” fix. When not teaching, Paul enjoys time on his Iowa, Missouri, and Washington farmland, combining his love for agriculture and lifelong learning.

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Soil Fertility Deduction

Course Description

Overview

Learning Objectives

Course Outline

Meet Your Instructor

Paul G. Neiffer CPA

Education Information