If you had a high income in 2001 and purchased machinery or equipment after Sept. 11, 2001, you may be able to reduce your tax bill with bonus depreciation. The new economic stimulus package just signed by President Bush allows 30 percent bonus depreciation on property having a recovery period of less than 20 years.

The provision is retroactive to Sept. 11, 2001, says Erlin Weness, farm management educator with the University of Minnesota Extension Service.

"Details are very sketchy at this time," Weness says. "But if you bought a new piece of machinery, equipment or a single purpose agricultural structure after Sept. 11, 2001 you may be eligible for the 30 percent bonus depreciation. If you had a high income year in 2001, check with your tax accountant about the feasibility of filing an amended return to lessen your tax bill."

"It appears the 30 percent bonus provision applies to any unclaimed basis after the $24,000 Section 179 depreciation has been deducted," Weness says. For example, assume you purchased a $50,000 asset in October 2001. You could first deduct the $24,000 of Section 179 depreciation and the remaining balance of $26,000 would be multiplied by the 30 percent bonus for an additional $7,800 depreciation.

The remaining $18,200 would be depreciated with regular depreciation over the ascribed lifetime of the asset. The provision applies only to new machinery and equipment, not used property.

This provision will be in place for three years. It's in effect for assets purchased before Sept. 11, 2004. It will allow for additional depreciation, if desired, in years 2002-2004. Weness says your tax accountant should have more details as they become available.