! talization rules, you must use the alter

CAUTION native depreciation system for all prop-

erty used in any of your farming businesses and placed in service in any tax year during which the election is in effect. See chapter 7 for addi- tional information on depreciation.

Example. You grow trees that have a preproductive period of more than 2 years. The trees produce an annual crop. You are an individual and the uniform capitalization rules apply to your farming business. You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less.

Preproductive period of more than 2 years. The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years.

More information. For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1.263A-4.