Article
Commonly missed fixed asset tax opportunities for wineries and vineyards
April 10, 2022 · Updated Jan. 29, 2025 · Authored by Sara Harper, Jonathan Gates
Fixed assets, also known as property, plant, and equipment, can be a powerful tax savings tool when managed correctly. Leveraging cost recovery incentives and tax credits can strengthen a company’s financial footing and open doors to additional capital investments.
Due to the nature of the business, most companies in the wine industry are capital intensive.
Tax opportunities in the wine industry can include:
- Deferring tax liabilities to later years
- Reducing current-year tax liabilities
- Increasing current-year cash flow
Increasing your cash flow can also allow you to reinvest savings into your business or simply weather an uneven economy.
Five tax savings opportunities for wineries and vineyards to pursue
There are several areas within your operations that can go overlooked.
Depreciable assets
Wine production requires significant equipment for more than just the crusher, fermentation tanks, or bottling line. Equipment includes the infrastructure and process-related electrical and plumbing hookups embedded within the winery facility.
These can comprise a significant share of the properties’ total acquisition or constructed cost. The more equipment and equipment support systems present, the higher percentage in assets available for shorter recovery periods — ultimately increasing your tax deferral opportunities.
For example, a $1 million winery facility could have 25%–45% of the property allocated to shorter depreciable lives, a possibility of $250,000 to $450,000 of federal tax deductions in the year the property is placed in service.
Energy efficiency credits and incentives
Assets that qualify for shorter recovery periods are only a portion of your potential. Most winery facilities adopt environmental and design development criteria when constructing or renovating their facilities. For instance, more and more industries, including the wine industry, have continued to roll out environmental, social, and governance (ESG) initiatives. These efforts are opening doors to additional benefits in energy efficient tax credits and deductions.
American viticultural area valuations offer potential tax savings for wineries
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.