Before Mike Dodson joined Advanced Agrilytics as a Land Advisory Manager, he experienced the Section 180 deductions from the other side of the table: as a farmer and customer.
Mike owns and operates Kuhn Creek Farms, so when he first learned that purchased or inherited farmland could include measurable residual fertility value, sometimes called legacy nutrients, the idea immediately caught his attention.
He had recently purchased 75 acres and already had soil-test information for the property. Working with Advanced Agrilytics, he completed a Residual Fertility Valuation (RFV) to estimate the value of qualifying excess fertility present when he acquired the land.
The analysis identified approximately $1,200 per acre in residual fertility value. Advanced Agrilytics documented the findings in a detailed report that Mike could take to his accountant for evaluation. His accountant ultimately chose to recognize the value over three years, using 60% in the first year, 30% in the second and 10% in the third.
“I was a customer before I ever started talking to other farmers about this. I had the soil tested, went through the valuation process and took the report to my accountant. Now, when growers ask what the process looks like, I can show them the same kind of report I received and explain exactly what I experienced.”
— Mike Dodson, farmer and RFV sales representative
Recognizing Residual Fertility and Legacy Nutrients as an Asset
When farmland is purchased or inherited, the buyer acquires more than acres of ground. Depending on the property’s management history, the soil may contain phosphorus, potassium, lime, and other residual fertility, often described as legacy nutrients, that was applied by a previous owner but remains available to support future crop production.
Historically, that fertility has been difficult to isolate and value. Modern soil testing, spatial agronomy, and field-level analysis now make a property-specific soil nutrient valuation possible, helping estimate the residual fertility value present at acquisition.
The Residual Fertility Valuation process is designed to provide the agronomic analysis and Section 180 documentation a landowner’s tax professional needs to evaluate whether a portion of the farmland’s acquisition basis may be attributable to residual fertility. Advanced Agrilytics does not determine tax eligibility or prepare the taxpayer’s return. Those decisions remain with the landowner and their CPA or tax attorney.
For Mike, that distinction is important.
“This is not just someone giving you a number,” he explained during a recent interview. “There is a detailed report behind it.”
He still carries a copy of his approximately 25-page report when meeting with growers. Rather than trying to explain the entire concept abstractly, he can show them what the final deliverable looks like and describe how he worked through the process with his own accountant.
A Farmer Talking to Other Farmers About Section 180
Mike began introducing the opportunity to farmers he already knew in his area: people who farmed down the road, operated in a neighboring county or stood beside him in line at the grain elevator.
His opening question was straightforward: Had they heard about the potential Section 180 deduction for fertilizer value acquired with purchased farmland?
For many, the answer was no.
That did not necessarily mean their CPAs had overlooked something obvious. The application of Section 180 tax deduction to residual fertility acquired with farmland is a specialized and still-developing area. The underlying tax provision has existed for decades, but the ability to produce property-specific fertility measurements and valuations is much more recent.
Mike found that his personal experience helped move the conversation beyond skepticism.
“I can tell them, ‘I bought this farm. I completed the soil testing. Advanced Agrilytics produced the report, and I took it to my accountant,’” he said. “They know I farm, and they can see the actual report. That makes the conversation much easier.”
He also uses a familiar comparison when growers ask whether the concept is legitimate. Most farmers already know Section 179 as a provision their tax professionals may use when evaluating the treatment of qualifying equipment. Section 180 is a separate section of the tax code addressing fertilizer, lime and similar soil-conditioning materials.
The comparison does not establish that every farmer or property qualifies. It simply gives growers a familiar starting point for a more detailed conversation with their tax advisors.
Bringing the CPA Into the Section 180 Conversation Early
One of the clearest lessons from Mike’s experience, both as a customer and now as a representative, is the importance of involving the landowner’s CPA early.
Before beginning a valuation, he encourages prospective customers to ask their tax professionals several questions:
- Are you familiar with the Section 180 deduction and residual fertility?
- Are you comfortable evaluating this type of farmland basis allocation?
- What records and Section 180 documentation would you want to review?
- How would you determine the appropriate tax treatment and timing?
Bringing the CPA into the process early can prevent a landowner from commissioning a report only to discover later that their advisor is unfamiliar with or unwilling to evaluate the position.
Advanced Agrilytics can provide educational materials and explain the agronomic methodology behind the report. The taxpayer’s advisor remains responsible for determining whether and how the valuation should be used.
“It adds a step at the beginning,” Mike said, “but it is much better to make sure the grower and CPA are aligned before the report is completed.”
“I do not have to ask a grower to take my word for it. I went through the process on my own farm. I can explain what information was needed, show them what the report looks like and tell them how I worked with my accountant. Their property and tax situation will be different, but they can see that there is a real analysis and a real process behind it.”
If you’ve recently purchased farmland, there may be more value in the soil than you realize. The nutrients already in place, often called residual fertility value or legacy nutrients, could qualify for a Section 180 tax deduction. Advanced Agrilytics can provide the field-specific analysis and documentation your tax advisor needs to determine whether it applies to your operation. If you’re curious about what may be beneath your acres, let’s take a closer look.
Important information: Advanced Agrilytics provides agronomic analysis and valuation documentation. It does not provide tax, accounting or legal advice. Eligibility, reporting method, deduction timing and tax treatment must be determined by the taxpayer’s CPA or tax attorney. Individual results vary.