Advanced Agrilytics team members Dan Cofield and Jeremiah Windell recently joined hosts Brian Watts and Cary Farrington on The Southeastern Land Show to talk about the Section 180 tax deduction and what it could mean for qualifying agricultural landowners.
Section 180 of the tax code allows qualifying landowners to potentially deduct the value of residual soil fertility present when agricultural land is purchased or inherited. Sometimes referred to as legacy nutrients, these nutrients can have measurable value that may qualify as a farm tax deduction when properly documented.
During the episode, Dan and Jeremiah explain how the Section 180 deduction works, who may qualify, and how Advanced Agrilytics uses soil sampling and agronomic data to establish the value of residual nutrients.
What Is the Section 180 Deduction?
When farmland changes ownership, nutrients already present in the soil may represent an existing asset with real value. Section 180 provides a way for qualifying landowners to account for that residual fertility for tax purposes.
Advanced Agrilytics evaluates the nutrients present in the soil and develops the documentation needed to establish their value. The resulting report can then be provided to the landowner’s CPA or tax advisor to determine how the deduction applies to their individual tax situation.
In the podcast, Dan and Jeremiah discuss several factors that can affect a Section 180 deduction, including:
- When the land was purchased or inherited
- Current soil nutrient levels
- The property’s cost basis
- Changes in land ownership
- Conservation program enrollment
- Business and ownership structures
- Timing of the deduction
They also walk through the process from start to finish, including contracting, soil sampling, analysis, report delivery, and working with a CPA.
Section 180, Legacy Nutrients and Residual Fertility Value
Landowners researching Section 180 may come across terms such as legacy nutrients, legacy nutrient valuation, residual fertility, or residual soil fertility deduction.
At Advanced Agrilytics, our approach focuses on determining the Residual Fertility Value (RFV) of the property. Soil sampling and agronomic analysis help establish the amount and value of qualifying nutrients present in the soil so landowners and their tax professionals have documentation based on what’s actually happening in the field.
It’s an approach that brings together agronomy and tax planning to help landowners better understand the value already present in their soil.
More Than a Farm Tax Deduction
The conversation also explores the bigger picture behind Section 180, especially for families purchasing, inheriting, or transitioning agricultural land.
For some landowners, identifying residual fertility value may create an opportunity to offset taxable income while recognizing an asset that already exists within the operation. Dan and Jeremiah discuss how that can become especially relevant during farm succession and generational land transfers.
If you’ve purchased or inherited agricultural land and haven’t explored IRS Section 180, this episode is a practical place to start.
Listen to the full episode of The Southeastern Land Show to hear Dan Cofield and Jeremiah Windell explain Section 180, residual fertility, eligibility considerations, and what the process looks like for landowners.
Want to Learn More About Section 180?
Advanced Agrilytics helps landowners quantify and document residual soil fertility using soil sampling, agronomic analysis, and historical nutrient values.
Disclaimer: Advanced Agrilytics does not provide legal, tax, or accounting advice. The information in this article is for general informational purposes only and should not be relied upon as a substitute for professional guidance. We are not certified public accountants (CPAs), attorneys, or tax advisors. Eligibility for IRS Section 180 deductions depends on individual circumstances and is subject to interpretation and approval by the Internal Revenue Service. We do not guarantee results or acceptance of any tax filing or deduction claim. Please consult an experienced agriculture tax professional to determine how this information may apply to your specific situation.