Headings Can Be Deceiving
I received the attached in my email earlier today with the heading “FOIA Data Show Thousands Exceed Payment Limit for Trump’s Farm Bailout”. As usual with this type of heading, the actual facts are materially different.
Yes, about 3,500 “farms” received over $125,000 from the 2018 Market Facilitation Payment (MFP), however, it is likely that not one of these “farms” was over the payment limit.
The limit is $125,000 per entity / per person, however, the limit does not apply if the farm is structured as either a general partnership (not an LLC) or as a joint venture. I am fairly sure that all of the 3,500+- farms were in fact either a GP or a JV.
Another 3,500 farms were listed showing exactly $125,000 of MFP payments. These would be farms that are not a GP or JV. Those would be limited to one $125,000 payment.
However, that is the first limit. The second limit is that each of the owners of the GP or JV have to have adjusted gross income (AGI) under $900,000. However, the Disaster Aid Bill signed earlier provides that as long as 75% of your AGI is from farming, then there is no AGI limit.
Most farm entities such as a corporation or LLC will meet this rule, however, each of the owners must also meet this rule and wages received from an S or C corporation do not qualify as farm income (at least based on the 2008 FSA handbook). Therefore, there may be several farmers who believe they qualify for this higher limit that may be surprised to not be eligible for any extra payment.
The disaster bill indicated this was for MFP payments. It did not refer to a specific year, therefore, 2018 MFP payments may also qualify for this provision.
The total payments made to these farms was about $1.227 billion with soybeans being $978 million, corn $13 million, cotton, $113 million, wheat $13 million, hogs $57 million, dairy $18 million, almonds $439,000 and cherries at $6 million.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Nice article…