Farm Industry Trends
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Watch Out For Sales to Related Parties
Many times we have farmers come in to get their tax return prepared and tell us that they will probably not owe any tax since they sold some property at a large loss. After reviewing the facts with them, we find out they sold the property to their son. We then have to tell them […]
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Watch Out For Two Classes of Stock in S Corps!
Many farm operations use an S corporation. These corporations legally are the same as any other regular corporation, however, for income tax purposes, the shareholders have made an election to be taxed similar to a partnership. One of the requirements of an S corporation is that there can only be ONE class of stock. You […]
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Some IRA Guidance
I sometimes find it amazing how much misinformation can be in the mainstream news media on how working Americans can not contribute to an IRA if they are covered by a retirement plan at work. This is simply not true. Any farmer that has earnings in excess of $5,000 ($6,000 if over age 49 and […]
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How The Sale of a Part Interest in a Tractor is Handled?
We had a reader ask the following question: “I am slowly turning my farm operation over to my son. Each year I rent to him more of my farmland and he buys more of my equipment. I purchased a tractor in 2008 for $159,000 on which I took Sect. 179 of $137,000 on it. Can […]
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IRS Relaeases New Inflation Adjusted Tax Related items
Revenue Procedure 2011-52 was recently released. This revenue procedure outlines most if not all of the inflation adjusted tax items such as the personal exemption amount, standard deduction, etc.. Of items of interest to farmers are as follows: For 2012, the 15% tax bracket ends at $70,700 of taxable income for married filing joint, $35,350 […]
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Buildings Must Be On The Depreciation Schedule!
We had a reader ask the following question: “My husband is a full time farmer and we are currently building a tool shed that will be done by the end of 2011. Will we be able to deduct the whole cost of the building or will it need to go on a depreciation schedule. Thanks […]
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Evidence of Combine Operation
I have been teased by several readers that there appears to be no evidence that I operated a combine on my farm road trip. Here is a photo of me operating a brand new John Deere Combine on the Hohenberger farmer in Illinois. Now, there is probably no evidence that I performed all combine operations […]
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How Does My State Treat Bonus Depreciation
One of the traps that we as tax advisors run into from time to time is sometimes forgetting the differences between federal and state rules for income taxation. For example, my state of Washington does not have a state income tax, so most of the time I do not deal with state income taxes for […]
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Last Part of the Farm Trip
On Friday I got early and drove the last 300 miles to Port Allen, LA near Baton Rouge. I met up with Keith and Heath Morris who farm sugar cane in the area. We went out into the field to watch the sugar cane be cut. The harvester only cuts on row at a time. […]
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Day Four of the Farm Trip
On Thursday, I got to spend the morning with John and Kurt Hohenberger near Leland, Illinois. I met them this January at TEPAP and looked forward to getting out to see them. They had just put in a new grain handling system at the home site and we were able to get out in the […]