← FarmCPA Home

Some More Goodies Buried in the Fine Print

By: | Trackback URL | 4 Comments

January 3rd, 2013

Included in the tax bill passed this week were some additional tax “goodies” for both farmers and non-farm taxpayers.

In previous years, taxpayers over age 70 1/2 were allowed to contribute up to $100,000 each year to a qualified charity and not have it count as income.  The amount given to the charity was not allowed as a deduction, but this allowed the taxpayer to reduce their adjusted gross income which may have made their social security income non-taxable or allowed more medical or miscellaneous itemized deductions.

This has now been expanded through the end of 2013 which may help those taxpayers whose gross income is reaching or exceeding the level that the Medicare surtax will be assessed.  For example, if a married taxpayer has $250,000 of cash rent farm income and is required to take $100,000 out of their IRA in 2013, $100,000 of their rental income will be subject to the Medicare surtax of 3.8%.  However, if they elect to distribute the IRA directly to a charity, then none of the cash rent income will be subject to the Medicare surtax.  Now this assumes that they would want to give up to $100,000 to charity.

Since nobody knew that Congress would extend this, they are allowing any taxpayer that normally meets the age criteria to take any distribution received in December 2012 and as long as it is paid to a qualifying charity by the end of January 2013, it will not be included as income.

Another extension is allowing taxpayers to amend a Section 179 deduction for any taxable year starting before January 1, 2014.  We previously wrote a post about a week ago regarding being careful with Section 179 deductions from fiscal year flow through entities such as S corporations.  Now that the Section 179 deduction limit has been increased to $500,000 for all years beginning before 2014, you will not need to worry about this until you file your 2014 tax return.

NASCAR fans will be glad to know that owners of racetracks will be allowed to depreciate these facilities over 7 years instead of the more normal 15 to 39 year span for at least another year.  We have a combine racing facility in our state.  I wonder if farmers could create a “qualified racing facility” on their farm and deduct it over 7 years (I hope everyone knows I am kidding about this.  Do not attempt this!)

Paul Neiffer, CPA

Paul Neiffer

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 partner with CliftonLarsonAllen in Yakima, 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. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

More Posts - Website

Follow Me:

← FarmCPA Home


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts


View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    Corn does well in Washington state. 55 at night 95 during the day plus irrigation 1 hour ago

    If average cash rents drop $50 this fall and cash return is 2% equals drop in average land values of $2,500. We shall see. 12 hours ago

    2 years ago corn + beans + wheat was almost $40. Now it is under $20. 14 hours ago

    Great time with @MRRChip today on Market Rally talking about the new farm bill. 2 days ago

    Drove over 2,000 miles in last 12 days. Saw a lot of good looking corn. Beans not so much 4 days ago

    When you drive through Minnesota, South Dakota and Iowa this time of year you see a lot of corn and beans and not much else 2 weeks ago

    Possible another reason for high US corn yield estimates is acres switched to beans were lower yield corn acres 2 weeks ago

    Don't understand why nobody claims the USDA manipulates the data when the report is bullish 2 weeks ago

    USDA pegged lower corn production but if yields trends continue this will quickly change to production increase. 2 weeks ago

    The soybean YO-YO is well underway 2 weeks ago