Farm Operations
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When Are My Agricultural Options Taxed?
We had a reader ask the following question: “I am looking at options to put floor prices in for my corn and soybeans. I have a few questions on the accounting for income taxes. Is the cost of options an expense for income tax the year you buy them? If you sell the option the […]
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Tools to Help You Make a Decision on What to Plant
With the late harvest in Ohio and other areas affected by all of the heavy rain and bad planting weather, many farmers face crucial decisions on what crops to plant. Should they take a risk on planting corn, switch to soybeans or collect insurance on prevented-planting acreage. You can check out these tools to help […]
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2011 Capital Gains Tax Rates
We seem to be getting a lot of requests or searches on what the capital gains tax rate is for 2011. In summary, capital gains and qualified dividend tax rates are as follows: Short-term (assets held less than a year) are treated as ordinary income. This means that the maximum tax rate will be the […]
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Components May Qualify for 100% Bonus Depreciation
In a post a couple of days ago, I indicated that a new Ag building placed in service after September 8, 2010 but where the construction started before that date would not qualify for 100% bonus depreciation, but would qualify for 50% bonus depreciation. There is one exception to this rule that may help farmers […]
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Watch Your Date of New Construction
The tax law passes late last year had a very favorable tax treatment for the construction of new farm buildings. In that law for any new farm buildings placed in service after September 8, 2010 and before January 1, 2012, a farmer would be able to write off 100% of this new construction cost in […]
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If the Bubble Busts, How Long to Recover
There has been a lot of talk lately in the press about whether farm land prices are entering a bubble phase similar to farm land in the early 1980’s or tech stocks in the late 1990’s. I decided to take a look at farm land prices for good Iowa farmland from 1950 to 2010 and […]
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It’s Total Farm Compensation – Not Wages – That Counts
I think that every farm operation should have an employment contract with each of their farm employees including all family members employed in the farm operation. As part of this document, there should be an exhibit that outlines the total compensation package to each employee. Most farm operations offer much more than a wage such […]
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Goodbye Pesky New 1099 Reporting
As we have posted here several times, last year, a new law was put into place that required reporting of all transactions over $600 to any vendor in a year. This included paying gas to the local coop, buying your fertilizer, etc. Yesterday, the Senate passed a bill which President Obama is expected to sign […]
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Take Advantage of Tax Rate Arbitrage!
Many farmers created a corporation several years ago to operate their farm. Many of these corporations have been converted over the years into S corporations. However, one of the potential drawbacks is the retained earnings inside of the corporation that need to be distributed at some point in time. Normally, S corporation basis is fixed […]
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$2 Cotton Can Lead to Bankrupt Farmers!
Now that cotton is rapidly approaching $2 a pound or corn is over $7 a bushel, many people feel that farmers now have it made and the good times will always be here. What I have seen in my career is that almost the exact opposite may happen. Many farmers (or other business people) get […]