Winegrowers in well-regarded appellations have been neglecting to make the best investment they can: the amortization of their vineyard’s appellation value. When a grower purchases a vineyard, he purchases not only the land and the vineyard planted on it, but also an intangible asset—the right for his grapes to be bottled and labeled with the name of the American Viticutural Area (AVA).

This distinction is important, as land cannot be depreciated as an expense against income. The intangible asset’s value, however, can be amortized over the course of 15 years. This rule applies to any vineyards purchased after 1993. It only applies to vineyards whose appellation actually creates value beyond what the land itself creates. For instance, vineyard land does not sell for a premium because it is in the Madera AVA, but it does sell at a premium because it is in the Oakville AVA. The former has no AVA value to appraise and amortize; the latter most certainly does.