May, 2016
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A Trade of Equipment on an Operating Lease can be Costly
With tougher times in the farm industry, equipment companies and banks have been promoting operating leases to farmers. In many cases, the farmer will “trade-in” equipment in return for not having to pay any of the operating lease payments or making a large down payment on the lease. If the trade of equipment was for […]
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How Will New Lease Accounting Rules Affect You?
If you borrow money from a bank for farm operations, you will likely have loan covenants that call for certain net worth to debt ratios. Recently released accounting standards regarding lease accounting may require your bank to change these covenants. Knowing how these new rules will affect your farm is important so that you can plan […]
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Obama Administration Expands Overtime Pay Eligibilty
Many of you may have been following the new expanded overtime eligibility rules saga associated with the proposed Department of Labor regulations (DOL). We finally have some clarity and it appears the new overtime rules may extend to an estimated 4.2 million workers. The rule increases the salary threshold that salaried workers are entitled to […]
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Farmland Values Continue to Drop
The Chicago Federal Reserve just released their First Quarter 2016 Ag Letter showing that farmland values continue to trend lower. The district covers most of the I states in the corn belt and show the following year-over-year changes in farmland values: Illinois – Minus 5% Indiana – Minus 2% Iowa – Minus 5% Michigan – […]
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Make Sure to Lock In Low Rate Family Loans
The IRS just released the minimum interest rates for June 2016 and they continue to be at record lows. These tables represent the minimum interest rate that you need to charge on loans, etc. If you elect to not charge any interest, the tax laws require you to “impute” interest based upon these minimum rates. […]
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Crop Insurance Payouts Lower in 2015
Gary Schnitkey of the University of Illinois just posted an article in FarmDoc Daily on an analysis of crop insurance damage payments in 2015. In 2015, the entire loss ratio for the industry was only .65 (1 is breakeven). This ratio is much lower than the .97 ratio from 2010 to 2015 and also much […]
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When Should You Pay Your Spouse and Kids?
My father was 47 when I was born (I am the oldest of three kids) and he elected to start receiving social security at age 62 (when I was 15). When a person elects to take social security benefits before full retirement age, there is a limit on how much you can earn before you […]
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What is Reasonable Compensation?
In the H.W. Johnson, Inc. Tax Court case issued yesterday, the Court found that a bonus arrangement paying out close to 95% of the net income of the company to the two key shareholders was in fact, reasonable compensation. They also found that a $500,000 payment to an affiliated company was allowed even though there […]
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Does FSA Allow Section 179 for Corporations
About two years ago we posted that FSA was not allowing Section 179 as a deduction for S corporations and LLC/LLP/LPs. We communicated our concerns to FSA and to others in Congress, etc. and thought that the FSA would update their interpretation to reflect Section 179 as an expense in arriving at AGI for these […]
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New HSA limits for 2017
A health savings account (HSA) allows taxpayers to set aside funds for health expenses. A deduction for the amount contributed is allowed as a deduction up to the limit allowed by the Code. This deduction is indexed to inflation and the IRS just announced the amounts allowed for 2017 as: Singles – $3,400 up from […]