Washington, D.C. – U.S. Senator Kirsten Gillibrand, the first New York Senator in nearly 40 years to serve on the Senate Agriculture Committee, today announced legislation that would allow New York fruit growers to take full advantage of federal recovery tax breaks. New York’s apple and peach growers and vineyards currently cannot use the tax break since new plants do not produce fruit immediately.
“New York’s fruit growers should be eligible for the same recovery act tax breaks as other farms and businesses,” said Senator Gillibrand. “During these tough economic times, New York’s agriculture sector has been hit hard. It is critical that our grape, apple, cherry, and peach growers be allowed to take full advantage of incentives in our economic recovery bill.”
According to New York Department of Agriculture and Market, New York’s fruit crop receipts were valued at $244 million in 2005, with apples and grapes leading in value. New York’s apples come primarily from along the southern Lake Ontario shore, along the Hudson Valley, and along the upper Lake Champlain Valley. Cornell cites that grape industry tourism and associated industries have a statewide economic impact of $6 billion – primarily produced around Lake Erie, the Finger Lakes, Hudson Valley and the eastern end of Long Island. In addition, New York is fourth in the nation to produce tart cherries and pears.
As a way of encouraging businesses to make more capital investments in the short term, the recovery act allowed companies to depreciate capital investment property “placed in service” in 2009 at a faster rate. However, under current law, fruit and nut trees are not considered “placed in service” until the taxable year in which they actually produce fruit that can be sold, which often can take years. Therefore, farmers in New York that grow grapes, apples, cherries, peaches, and wine are not able to take advantage of the stimulus benefit.
Senator Gillibrand’s legislation, with Senators Barbara Boxer (D-CA) and Bill Nelson (D-FL), would change – only for the purpose of bonus depreciation – the “placed in service” date for permanent crops to the date on which the crop is planted, putting fruit growers on par with others farmers’ eligible for bonus depreciation for capital expenditures made this year.