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The United Kingdom - Our Best Pre-war Customer 



Apple production in the United Kingdom has almost tripled since 

 the 1930's, rising to nearly 30 million bushels in 1963. 



Cox Orange Pippin is the most prominent variety being planted. 



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INVESTMENT CREDIT ON ORCHARDS 



Lawrence D. Rhoades and Earl I. Fuller 

 Department of Agricultural and Food Economics 



Amendments to the Internal Revenue Code which became effective in 

 1961 provided for a special direct federal income tax credit for qual- 

 ified investment in certain property used as an integral part of "manu- 

 facturing, production, or extraction." 



The property must be tangible personal property or other tangible 

 property, must be depreciable property and must have a useful life of 

 four years or more. 



Income tax regulations include the cultivation of orchards in the 

 terms "manufacturing," "production" and "extraction." 



New property which would qualify for investment credit includes 

 property purchased after December 31, 1961 and where the original use 

 of the property commences with the taxpayer and commences after that 

 date. 



Used property would include all other property that meets the tests 

 but is not new property. 



The determination of whether the property qualifies must be made 

 with respect to the first taxable year the property is placed in ser- 

 vice. 



Property is considered as placed in service in the taxable year in 

 which the property is placed in a condition or state of readiness and 

 availability for a specifically assigned function or the year in which 

 depreciation begins, which ever is earlier. 



Fruit bearing trees and vines are not considered to be in a state 

 of readiness and availability or subject to depreciation until they 

 have reached an income producing state. 



All expenditures to bring orchard trees and vines to a producing 

 state should be capitalized and thereafter a fair and reasonable annual 

 allowance for depreciation is permitted. 



