Rental Property Needs a New Well

[Bart]

Client has a rental property that has a well. The well went dry because of the drought. The client is having a new well dug and the cost will be $30,000. Is the well deductible?

[Max W]

Water wells have a 15 year MACRS depreciation.

[Margaret CPA in OH]

I am trying to post a new topic without success so am trying now to see if I can post anything.

[Margaret CPA in OH]

I now see that the title to my post managed to make it and there are replies but all I can see are more of the same messages. Is there some cosmic being playing dastardly tricks on me? Maybe someone will reply to this post as it seems I can access only this one. Thanks!

[ed_accountant]

Since it is a "new" well it should be capitalized and depreciated.

[kcjenkins]

It can be 179'd, but must be capitalized, as this goes beyond being a repair. It substantially extends the life, if nothing else.

[Ranger]

Wells generally do not qualify for section 179. But off the top of my head, there might be an exception for a well used to water livestock.

[Ranger]

Ok, here it is. Water wells used for livestock or crops qualify for section 179.

Farmers ATG - Chapter Three - Basis on Farm Assets

Publication Date - July 2006

1245 Property

1. Tangible personal property such as equipment, machinery, tools and trucks (Buildings and structural components are not included).

2. Other tangible properties, for example, are:

1. Fences in connection with raising livestock

2. Paved feedlots

3. Water wells that provide water for poultry, livestock, or irrigation of crops

4. Drainage tiles

5. Groves, orchards and vineyards if productive (Exempt from IRC §179 per Rev. Rul. 67-51)

6. Bins, gas storage tanks, silos

3. Livestock used for breeding cattle, hogs, sheep, and dairy cattle [purchased, not raised].

4. Single purpose livestock or horticultural structures

[kcjenkins]

Sorry, I should have been more specific. Agricultural wells are subject to sec 179, and since I deal with a lot of farmers, I tend to jump to that conclusion first off.