Farm Taxes
-
Taxpayer Victory in Frank Aragona Trust Case
The US Tax Court released today their long anticipated decision in the Frank Aragona Trust case. The background on the case is as follows: The Frank Aragona Trust was formed by Frank Aragona during his lifetime and after his death, the trustees of the trust were his five children plus an independent trustee. Three of the children […]
-
Painful Form 8879 Process is on its Way
Almost all of our tax returns that we prepare for farmers are now being electronically filed with the IRS and related state taxing authorities. The form that we need from the client in order to electronically file the return is Form 8879. This form must be signed by an appropriate person for entities and then […]
-
Schedule F Reporting Update
I got some feedback on my previous post on Tax Reform and low Schedule F reporting of income. Several sources of farm income does not show up on a Schedule F. This includes many common sales of farm assets such as breeding stock and equipment. Most of the expenses associated with this income is deducted […]
-
One More Reason Why Tax Reform is Going After Cash Method
The IRS issues data regarding income tax information for filers every year. I ran across a posting on the net farm income and loss reported by Schedule F farmers for 2011 and 2012. During each of these years, the USDA estimated that farmers had net farm income in excess of $120 billion. However, on schedule […]
-
Cash Rents Equals Extra 3.8% on Sale
We had a reader ask the following question: “Can you give some advice on the impact of retiring from active farming and cash renting the farm as it relates to the 3.8% tax on capital gains. Given a large increase in the land value while actively farming, do you give up the exemption from the […]
-
Real Estate Includes Land but Not For Depreciation Purposes
We had a reader send in the following comments and question: “I appreciated your information on the tax reform proposal. In your 4th bullet point on depreciation, you stated that “Most if almost all farm real estate…would be over 40 years and not the current 10 or 20 years.” It has been my understanding that […]
-
A Bad Day in Court
The Tax Court today released the Kaplan case. Gary Kaplan was a professional sports bookie. He started his career in the US and then moved it to the Caribbean before finally settling in Costa Rica. During this time, he formed a company called BetOnSports PLC. This company became the most successful overseas sports booking company […]
-
Permanent Means Permanent
Many farmers will sell or grant a conservation easement to various organizations. These easements are designed to permanently keep certain farm land out of production due to their sensitive topsoils or other features. If the granting of the easement is structured properly, the difference between the fair market value of the land before the easement and the value […]
-
When to Report Hedging Gains and Losses?
We had a reader send in the following questions: “We have an accrual basis farm partnership, for income statement purposes we have used the mark to market approach to the value of the hedge which was at a gain. For income tax purposes can we report the gain or loss when the hedge is closed?” […]
-
How Much Longer for Section 1031 Exchanges?
In the budget proposal just released by President Obama, he calls for a cap on the amount of gain that could be deferred under Section 1031. This cap would be $1 million each year indexed for inflation. The tax reform proposals released by both the Senate and the House call for major changes to like-kind […]