December, 2010
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Lower Income Farm Hands Lose Money on New Tax Bill!
The Tax Relief Act passed last week provided for a 2% reduction in the employee’s portion of the FICA tax. This dropped the tax rate from 6.2% to 4.2% for 2011 only. For individuals making more than $20,000 in salary or net farm income, this is an actual net tax decrease. However, for farm hands […]
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Do We Have To Do a 1099 on Feed Purchases?
One of our readers asked the following question: “I bought some high moisture corn from another farmer for feed in my feedlot. Do I have to send a 1099 to the farmer from which I purchased the corn? “ When a farmer purchases services from a non-incorporated taxpayer and those purchases total more than $600 […]
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A Trade-In Can Cost You $15,000 in Tax!
Many farmers mistakenly assume that if they have a used piece of farm machinery and they want to get a newer piece to replace it, that a trade-in always saves them money at tax time. However, in many cases, this is not true and in fact, can cost the farmer up to $15,000 in self-employment […]
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President Obama Signs Tax Relief Act of 2010!
Yesterday, President Obama signed the Tax Relief Act of 2010. As discussed in previous posts, this bill has many tax benefits for farmers and their families and operations. We will continue to give you real world examples in the next couple weeks that can save your operation income taxes.
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Help, When Should I Sell My Land?!
A reader just sent us the following question: “If I had a parcel of farmland for sale, would I benefit by selling it this year 2010 or 2011? I was wondering how capital gains tax would affect what I would pay for both years?” With the passage of the Tax Relief Act of 2010 late […]
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Congress Passes Tax Act – President to Sign Soon!
Late last night, the House passed The Tax Relief Act of 2010 with a fairly large majority vote of 277-148. This is the exact same bill that came over from the Senate so there will be no changes to the Act and President Obama should sign the bill before Christmas. As discussed in some of […]
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When is Land Rent Reported as Income?
We had a reader send in the following question: “We own farm land in Iowa. Last half rent has not yet been received though contract states last half to be received by landlord on December 1. If rent moneys are not received until January of 2011 is rent properly reported on tax return as 2010 […]
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Senate Should Pass 2010 Tax Relief Act Today!
The Senate is expected to pass their 2010 Tax Relief Act today and then pass it onto the House for their review. The only expected snag in the House is related to the Estate Tax portions of the bill. Some of the more liberal House Democrats do not want to raise the lifetime exemption to […]
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Another Estate Tax Goodie in Proposed Tax Act!
One of the newly proposed estate tax rules in the proposed tax act is the allowance of estates to combine both spouses lifetime exemption to maximize the estate tax savings. Under current law, if the first spouse passes away and if their estate is less than the current lifetime exemption, the excess is lost forever. […]
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Coordinate your Section 179 Deduction with Bonus Depreciation
With the large increase of Section 179 deduction for 2010 and 2011 to $500,000 and 50% bonus depreciation on new assets in 2010 and possibly 100% in 2011, it is now even more important for your tax planning to coordinate these two deductions. Here are the important rules to remember: Section 179 deduction is available […]