Farm Taxes

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    January 31st, 2016


    Pre-1977 Purchases May Get 100% Step-up or Not!

    We had a reader respond to our last post with the following: “One additional thought on the “Farmer Brown purchased 40 years ago” example.  If it was a pre-1977 joint interest, his wife could get a 100% basis step up, if the funds to purchase the property and pay for the mortgage came solely from […]

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    January 26th, 2016


    What Gets a Step-Up

    I continue to get questions regarding how much of a step-up in cost basis farmland gets when someone passes away.  Again, as with most tax questions, it depends.  The key factor for determining the step-up is who owns the land.  Is it owned by the person who passed away or is it owned by an […]

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    January 19th, 2016


    Many Specialty Crops See Drop In Prices Too

    It is not just corn, soybeans and wheat that are seeing slumps in prices.  Many specialty crops such as almonds are also seeing a drop in price due to an increase in the dollar and reduced demand for the product. A recent article by Valley Public Radio spotlight the issues that almond growers are facing […]

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    January 14th, 2016


    Planted Vines and Trees Qualify for Bonus Depreciation

    It is not often that we post on orchards or vineyards, but one of the new provisions from the tax extenders bill is the ability for orchards and vineyards to deduct 50% of the cost of trees or vines in they year of planting instead of the year the plant is placed into service.  The […]

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    January 11th, 2016


    Relief for Older Farmers with IRAs

    The Tax Extenders bill made permanent the ability for older taxpayers to contribute up to $100,000 of their IRA holdings directly to a charity.  For many older farmers, this option can save them income taxes.  There are several situations where this may help a farmer.  We will review three of the options to see how […]

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    January 6th, 2016


    “BIG” Might Not Be a Problem

    Many farmers formed corporations back in the 1970’s and 1980’s and in most cases, they were formed for tax purposes.  Over time, these corporations build-up a large amount of deferred grain sales, prepaid farm expenses and other assets that have little or no tax basis (“cost”).  In order to prevent a double tax (a corporation pays […]

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    January 5th, 2016


    Is Section 179 a Ticking Tax Time Bomb?

    Most farmers took advantage of up to $500,000 of Section 179 over the last five years.  The recent tax extender bill has now made this permanent at the $500,000 level (indexed to inflation after 2015) and it does not start to phase-out until a farmer invests more than $2 million in farm equipment. On the […]

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    December 29th, 2015


    50% Bonus Depreciation Applies to More Property

    50% bonus depreciation has been extended to 2020 (40% in 2018 and 30% in 2019).  Under the old rules, only property with a life of 20 years or less was eligible for bonus depreciation.  Since all farm property has a 20 year or less life, then any new farm property was eligible for bonus depreciation.  […]

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    December 23rd, 2015


    Farm and Ranch Provided Housing

    Many farmers and ranchers provide housing for their employees.  Farmers who participate in H2A temporary labor from other countries have certain requirements to provide this housing. By providing this housing, there are certain tax advantages that may accrue to the farm or ranch.  First, if the employee being provided the house is not an owner […]

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    December 21st, 2015


    Wind Energy Credits Extended and Phased-Out

    An income tax credit is allowed for the production of electricity from wind facilities.  This credit is equal to 1.5 cents per kilowatt-hours of electricity produced.  The producer can also elect to take 30% of the cost of the facility as a credit against their income taxes instead of the production credit (Warren Buffett’s Berkshire […]

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