Husband and wife grape-growers in Geyserville, Calif., got some mixed news last week, after the U.S. Tax Court took a closer look at how they could depreciate improvements made to their vineyard.The court found that although Leo and Evelyn Trendadue properly classified wine grape trellises on their land as farm machinery or equipment, because the irrigation systems and well the couple built on their property have a longer class life (20 years, as opposed to 10 years) those enhancements should be classified -- and depreciated for -- as permanent land improvements.

The couple operates their business, Trentadue Winery and Vineyards, as a sole proprietorship and the Internal Revenue Service claimed income tax deficiencies for the business’s 1999 and 2000 tax years, in the amounts of $12,339 and $5,473, respectively, due to the depreciation differences.

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