Here They Go Again
In response to our blog post yesterday, we had a reader send in the following question:
After looking at this and reading the actual language that is on the website, I think we may pass the income test. It specifically says the average for the 2016, 2017, and 2018 years has to be under the $900,000 – that is the 2020 FORM. We did qualify for that I believe. Then is says IF YOU WERE OVER the $900,000 for those years but under for 2020 then you have to fill out a form and certify that your 2020 AGI is under.
I originally thought that the reader was wrong on the language related to 2020 AGI being under would qualify you, but after I read the actual language on the website, the reader is correct.
You have two methods of qualifying based on your taxable adjusted gross income (AGI). You can have a simple three-year average of 2016-2018 AGI. If that number is under $900,000, then you automatically qualify. If that number is over $900,000, then you have two options.
First, you can have your CPA or attorney determine what your income would be if you filed a married filing separate return. You are not required to file a separate return, just what the number would be if you had filed one. If both incomes are under $900,000, then the CPA/attorney can write the FSA approved letter and attach that to the required form. This only applies for married couples. Entities would need to go to the next option.
The last option which appears to be specific to the Spot Market Hog Pandemic Program is if your AGI is over $900,000 for 2016-2018 but under for 2020, then you can have a CPA or attorney certified this on Form 1123. However, CPAs are not allowed to certify these numbers under our ethics; but the FSA and American Institute of Certified Public Accountants have developed sample letters for FSA AGI certification that meets the FSA requirements.
In this case, I would suggest that we, as CPAs, would simply take that letter and update to meet this requirement.
This program appears to have to have no individual payment limits and reduced AGI limits. Take advantage of them if you qualify.
We also had another reader indicate they sell hogs based on a contract that calls for a price plus/minus some market adjustments. They wondered if that would qualify for this program. My reading of the programs appears to indicate they might not qualify, but the best solution is to check with the local office.
As has happened in the past, the original language in the programs is not always clear and can be updated. We will keep you posted.
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.
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