Farm Taxes
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Additional De-Minimis Election Update
Yesterday, we posted on how making the $2,500 de-minimis election may not make sense in certain cases, especially if the farmer is purchasing many assets costing less than $2,500 that will appreciate in value (such as young breeding stock). We mentioned in the post that the gain was ordinary, but forgot to mention that this gain […]
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Be Careful with De-minimis Election with Breeding Stock
We mentioned in a previous post that the IRS has updated the de-minimis election to allow farmers and ranchers to deduct all items costing less than $2,500 on their income tax return. This is an annual election and most farmers will make the election. This allows them to deduct all items costing less than $2,500 […]
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DTN Ag Summit
I will be speaking in two sessions as this year’s DTN Ag Summit. This Sunday, Nick Houle from our Minneapolis office and myself will be speaking on how to reduce the income tax impact from a farmer retiring. Most farmers do a great job of deferring income taxes during their career, however, when it comes time to retire, […]
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A Slow Slog to the Finish Line on Section 179
As usual, Congress continues to dither on any tax extender bill for 2015. The tax extender bill would likely have Section 179 at $500,000 and 50% bonus depreciation on new purchases. Senator Orrin Hatch (R-UT) has indicated that a one-year extension similar to last year will not work. President Obama and Rep. Nancy Pelosi (D-CA) […]
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IRS Raises Tangible Property Expensing Threshold to $2,500
Yesterday, in Notice 2015-82, the IRS raised the de minimis safe harbor threshold for deducting certain capital items from $500 to $2,500. This applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item for businesses without an applicable financial statement (audited financial statement). Keep in mind, […]
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What is your Machinery Value Per Acre?
The FarmDoc Daily just posted an article on the average value of farm machinery based upon the size of farm operation in Illinois. As can be expected, as the size of farm increases the total amount invested in farm machinery also increases. However, the reverse is usually true for the amount of investment per acre. […]
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Year-End Tax Planning Webinar
I will be hosting a year-end tax webinar for Clifton Larson Allen next Tuesday, November 24 from noon to 1 pm CST. The topics that will be covered are as follows: Quick Update on ARC-CO Payment Recalculations, Understand Tax Law Changes for 2015 (there were not many), Accomplish Effective Tax Planning with Multiple Entities, Manage […]
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Trends in Write-Offs of Farm Assets
The Tax Foundation periodically comes out with good information on tax statistics. They recently issued a report on corporate investment in equipment for tax year 2012. My perception has been that most of the equipment purchased during 2012 was new equipment. Based on this report, my perception may be in error (or not). is compared […]
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When Will We Know Section 179 Amount?
We continue to have the question asked about what will Section 179 be for 2015 and when will we know. Currently, a farmer is only allowed to deduct $25,000 under Section 179 and if the farmer spends more than $225,000 on equipment, then they are not allowed to deduct any Section 179. Both the House […]
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Does 7 Equal 5?
Senator Roberts (R-KS) and Senator Klobuchar (D-KS) introduced bipartisan legislation last month to allow farmers to depreciate farm equipment over five years instead of the current seven years. “Changing the depreciation schedule for agricultural equipment to five years would make the tax code more consistent and support rural development by aligning the length of time that […]