Farm Leadership
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Are You a Farmer?
Farrmers have special provisions for making estimated taxes. However, you must qualify as a “farmer” and under tax reform that may become more difficult.
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Cash or Grain – Which is Better?
Farmers can either give grain or cash to a charity. In almost all cases, it is much better to give grain from an income tax standpoint.
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Don’t Expect an Increase in the Corn Reference Price
The 2019 Farm Bill added the term Effective Reference Price. It allows the current reference price to increase, but don’t expect any increase for corn (unless you think we will get $7 corn in the next five years)
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LLC Equal Flexibility
LLC’s allow investors in farm operations to get a preferred return and then split profits after that return. You will start to see more of these in farming.
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Wheat and Cotton Seed ARC or PLC
Some readers asked us to run calculations on wheat and cotton seed.
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You Can Capitalize Repairs
Many farmers are showing losses this year. By electing to capitalize repairs, you may be able to get your taxable income to the optimum level.
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Be Careful of Processing Cooperatives
For 2018, farmers who sell to a processing cooperative will likely have additional calculations and timing issue.
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What About Cooperative Transition Rule
We appear to have our “guidance” on the cooperative transition deduction under Section 199A. It is not very detailed and we provide one method of calculating this deduction.
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What to Deduct For QBI
Qualified Business Income has to be reduced by other deductions that show up on Form 1040. We review how that is calculated.
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Common Ownership = No Hours Required!
There is confusion on hours required under common ownership. The quick answer is there are no hours required.