Can You Claim a Section 180 Soil Fertility Deduction When Buying Farmland in South Dakota?

Yes. A recent farmland purchase in Walworth County, South Dakota resulted in a Section 180 soil fertility value of $592,813.32 after Soil Tax Guys completed a comprehensive soil fertility evaluation.

The property contained $1,787.65 per acre in existing soil fertility at the time ownership transferred. Those nutrients became part of the buyer’s investment when the farm was purchased and were documented through a Section 180 soil fertility report.

Section 180 Success Story from Walworth County, South Dakota

• Location: Walworth County, South Dakota
• Property Type: Row Crop Farm
• Section 180 Soil Fertility Value: $592,813.32
• Per Acre Soil Fertility Value: $1,787.65

Walworth County is located in north central South Dakota along the Missouri River and is known for productive cropland and diversified agricultural operations. Corn, soybeans, wheat, and small grains are commonly grown throughout the county, with producers making long term investments in soil fertility to maximize yields and preserve productivity.

When this South Dakota farm changed ownership, Soil Tax Guys completed a Section 180 soil fertility report to document the value of the nutrients already present in the soil.

Why Existing Soil Fertility Matters

When you purchase farmland, you acquire more than the land itself.

You also acquire the nutrients that previous owners invested in through years of fertilizer applications and sound agronomic management.

Phosphorus, potassium, sulfur, lime, and other essential crop nutrients remain in the soil until they are removed through future crop production. Replacing those nutrients represents a significant cost, which is why existing soil fertility has measurable economic value.

Section 180 allows qualifying taxpayers to identify that value and work with their CPA to determine the appropriate tax treatment.

Why Soil Testing Is Essential

Every Section 180 soil fertility report begins with soil testing.

Laboratory analysis documents the nutrients that existed when ownership transferred. Those results provide the foundation for calculating the replacement cost of the fertility contained within the property using accepted agronomic principles and current nutrient values.

Whether Soil Tax Guys performs the sampling or the buyer provides qualifying soil test results, every report is built using actual field data collected from the farm.

Agriculture in Walworth County, South Dakota

Walworth County has a strong agricultural heritage with fertile soils that support both crop production and livestock operations. Producers continually invest in maintaining soil fertility because nutrient availability plays a critical role in long term productivity and profitability.

Every farm has a unique fertility history based on crop rotation, fertilizer applications, soil characteristics, and management practices. That is why Soil Tax Guys evaluates every property individually using actual soil test results rather than generalized assumptions or regional averages.

Results

For this South Dakota farmland purchase, the completed Section 180 report documented:

• Total Soil Fertility Value: $592,813.32
• Soil Fertility Value Per Acre: $1,787.65

Many farmland buyers choose to claim the deduction during the year they purchase the property. Others work with their CPA to spread the deduction across multiple tax years as part of a broader tax planning strategy.

Frequently Asked Questions

Does Section 180 apply to farmland purchased in South Dakota?

Yes. Section 180 is part of the Internal Revenue Code and may apply to qualifying farmland purchases throughout South Dakota.

Why can South Dakota farmland contain valuable existing soil fertility?

Many farms have benefited from decades of fertilizer applications and careful nutrient management. The only way to determine the value on a specific property is through soil testing and a professional Section 180 evaluation.

Do I need a soil test?

Yes. Soil testing documents the nutrients present when ownership transferred and provides the foundation for every Section 180 soil fertility report.

Can I provide my own soil test results?

Yes. Soil Tax Guys can often prepare a report using client supplied soil test results that meet the necessary timing and quality requirements.

Can the deduction be claimed over multiple years?

Yes. Many buyers work with their CPA to determine whether claiming the deduction over several tax years best aligns with their overall tax planning strategy.

Get a Free Per Acre Value Estimate

If you are purchasing farmland in South Dakota, Soil Tax Guys can review your soil test results and provide a free per acre value estimate.

If meaningful soil fertility exists, we prepare a comprehensive Section 180 soil fertility report that provides the documentation your CPA needs to evaluate the deduction.

Whether you are purchasing farmland in Walworth County or elsewhere in South Dakota, understanding the value already contained in the soil can improve your investment return and help uncover one of the most overlooked tax opportunities available under Section 180. Soil Tax Guys has helped buyers across the country document millions of dollars in existing soil fertility through independent agronomic analysis, accurate soil testing, and comprehensive Section 180 reporting.

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