Farm Taxes
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Will the 70/30 Rule Come Into Play
Reasonable compensation to an S corporation owner must be backed out of the new Section 199A deduction. Will IRS try to assert more reasonable compensation than what is currently required (i.e. the dreaded 70/30 proposal).
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Electing 50% Bonus for 2017 Returns is All or None
Taxpayers can elect out of bonus deprecation on certain classes of assets. However, if you want to elect out of 100% bonus depreciation for 2017 and take only 50% you have to do all-or-none.
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Don’t Count on Qualified Property to Help in Year of Sale
Section 199A allows a deduction limited to the greater of 50% of wages or 25% of wages plus 2.5% of qualified property. However, you have to own the property at year-end to qualify.
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Divorce Taxation to Change in 2019
Under old tax law, alimony was both deducted and treated as income. The new tax law eliminates both provisions.
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Involuntary Conversions Have Not Changed
Trade-ins of farm equipment is now taxable. However, if there is an accident to the equipment and your get a check from the insurance company, that is not necessarily taxable. We explain how.
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Built-in Gain Tax May Apply More Often
Now that trades of farm equipment are taxable, the built-in gains tax may start to apply when farmers are least expecting it. We go over some examples.
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Trades of Land Can be Tricky
Land exchanges were easier under the old tax laws. We show you how more complicated it is under the new tax law.
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Equipment Trade-Ins (Continued)
Trade-ins of farm equipment is getting more complicated. We go over some of the examples.
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State Tax Treatment of Farm Equipment Trades
Gain on trading-in farm equipment is now required. With 100% bonus depreciation, the net bottom line is still likely the same. However, in many states the net deduction can be substantially different. We fill you in.
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Farm Tax Webinar – February 7
We are having a webinar on February 7 on the new tax bill and its implication for farmers. Everyone is invited to attend.