Farm Taxes
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How Do We Plan For Section 179 in 2014
We have done several posts this year on what Section 179 might be for 2014. Currently, Section 179 is limited to $25,000 and it starts to phase-out once the farmer spends $200,000 on farm equipment and is eliminated once the farmer goes over $225,000. For 2014, there is no bonus depreciation, whereas last year farmers […]
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Will Tax Inversion Debate Yield Permanent Section 179
Congress is currently debating some type of tax inversion bill to make it more expensive to change a company’s tax domicile from the US to overseas. This post will not discuss the merits of those proposals, but just let you know there is some discussion that along with the tax inversion changes that Congress will […]
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A Deduction of Zero is Still Zero
We had a reader ask the following questions: “We expense all costs to raise the cattle: vet, supplies, etc. We grow our own feed and expense those costs: seed, fertilizer, etc. We have our farm set up as a LLC. Can we deduct a loss for calf deaths?” Ranchers who raise their own stock, such […]
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Partner Must Have Basis to Deduct Loss
In an US Tax Court case that was released yesterday, partners were found not to have tax basis in promissory notes that they “contributed” to the partnership. Farmers will create partnerships to run their operation and since farm tax law allows farm businesses to usually generate a small profit or even a loss; partners must […]
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IRS Releases 2012 Income Data
The IRS recently posted to their website the income statistics for 2012. These statistics break down income into their major components such as wages, interest, business income, etc. Farmers who file Schedule F are also listed. Farmers who file as a partnership or S corporation along with related wages would be lumped in with those […]
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How $563 Cost a Taxpayer $6,320
In an US Tax Court case released today, a taxpayer (who was not a farmer thankfully) had a very small issue with the IRS. The couple earned well in excess of $200,000 during 2009 and deducted $11,000 for an IRA for him and his spouse. Since the spouse was covered by a pension plan, this […]
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Trends in Crop Revenues
The USDA released updated estimates of net farm income for 2014 today and I thought I would reproduce the chart of estimated crop revenues from 2010 to 2014 below: As you can see, 2012 was the high-water mark for almost all crops over the last five years (2014 is an estimate). Only fruits and vegetables had […]
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Watch Out for Timing of Hedging Loss
I hesitate to write this post since I know that most of our farmers who hedge (including their tax advisors) may be technically reporting their hedging loss in the wrong year. In most cases this will not be true, but there are cases where it may happen and if an IRS auditor who knows hedge […]
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How to Sell Your Land and Pay No Tax – MAYBE
I had a reader ask me questions regarding the taxation of an installment sale of farmland. I helped him out and thought it would be a good idea to do another post on how you may be able to sell farm land (or other capital gain assets) in certain situations and pay no federal income […]
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FBS Conference – Hedging Accounting and Taxation
I will be presenting at the FBS Systems Annual Conference in Moline, Illinois on Tuesday August 26, 2014. This is a full day workshop in conjunction with Norm Brown (owner of FBS Systems) on hedging accounting and taxation based upon the standards issued by the Farm Financial Standards Council. This workshop will review the standards, […]