October, 2010
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How to Allocate Land Purchase?
We received the following questing regarding our post on the allocation of land purchase to vineyard AVA: “Paul, You cover depreciating improvements on land. I am buying 150 acres in north-central Iowa that is bare ground. It has two county main tile lines running through it, has a blacktop road on one side and a […]
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Creative Taxpayer Gets Denied
Many farmers forget to properly allocated their purchase price when purchasing land. For tax purposes, you can not deduct land, however, you can depreciate any improvements made to the land. For example, assume a farmer buyer a quarter section for $1 million dollars. On that quarter section, there is a well, roads, fences, buried main […]
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Cost Basis Now Reported on Form 1099-B
Back in 2008 a new law was passed requiring banks and brokerage companies to report the cost basis of stocks, bonds, etc. sold during the year. This reporting is to start for purchases after December 31, 2010. The IRS has now released regulations that this cost basis information will be reported on form 1099-B which […]
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Dynamic Live Budgeting – Update
I have gotten a few requests on if there is software out there that will handle a dynamic live budget for farmers. What I have found so far that works the best is to use an Excel spreadsheet. I have reviewed a couple of budgeting programs that are for me simply to complicated to work […]
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Dynamic Live Budgeting – Use it to Prosper!
I see way too many farmers and other business people who treat their annual budget as the necessary evil that the banker requires at year-end to get the loan. A very successful farmer will, rather, treat a budget as a dynamic live tool that will help guide their operation to maximize profits. First, lets review […]
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Watch Your State Disconnect on Tax Depreciation
As we have previously noted in a couple of posts, the Section 179 deduction has been substantially increased for this year and next year to $500,000 and the 50% bonus depreciation has been re-enacted for 2010. However, most if not almost all states do not follow this rule. I know that Oregon does not follow the federal […]
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What’s Your Contribution Margin?
The University of Purdue and other universities do a good job of providing estimated crop costs and return guides for each major crop grown in their area. I decided to take their 2010 Crop Cost and Return Guide and update with three ranges of prices for the five different crop rotations shown. I am using a low, […]
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Remember Your 3 To 1 Ratio!
Now that the USDA has really surprised us with an US corn crop of about 156 bushels per acre, as farmers you need to remember how this will correlate to your planting intentions for this year and next. Since we can assume at current prices, corn, bean and wheat will be profitable next year, the […]
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Ag Struggles in 2nd Quarter, How Will 3rd Quarter Look?
In August of this year, The Minneapolis Federal Reserve reported that the agricultural credit conditions in the second quarter were somewhat pessimistic compared to the previous quarters. The Ninth district comprises the states of Montana, North and South Dakota, Minnesota and parts of Wisconsin and Michigan. Although the credit conditions for this district were slightly […]
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The Use of Dyed Diesel Leads to $9,000 IRS Penalty
In my home state of Washington, we now have a case of the IRS fining a farmer $9,000 for using dyed off-road diesel in his bale wagon to transport the hay from his field to his haystack. During this transport, the farmer was briefly on a public road and an IRS agent staked him out […]