Farm Taxes
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What is Reasonable Compensation?
In the H.W. Johnson, Inc. Tax Court case issued yesterday, the Court found that a bonus arrangement paying out close to 95% of the net income of the company to the two key shareholders was in fact, reasonable compensation. They also found that a $500,000 payment to an affiliated company was allowed even though there […]
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Does FSA Allow Section 179 for Corporations
About two years ago we posted that FSA was not allowing Section 179 as a deduction for S corporations and LLC/LLP/LPs. We communicated our concerns to FSA and to others in Congress, etc. and thought that the FSA would update their interpretation to reflect Section 179 as an expense in arriving at AGI for these […]
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New HSA limits for 2017
A health savings account (HSA) allows taxpayers to set aside funds for health expenses. A deduction for the amount contributed is allowed as a deduction up to the limit allowed by the Code. This deduction is indexed to inflation and the IRS just announced the amounts allowed for 2017 as: Singles – $3,400 up from […]
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Pooling is Back!
Senator Backus a few years ago proposed replacing the current tax depreciation system with a pooling system. Under that system, personal property purchases and sales would be “pooled” together and the net remaining number would be multiplied by a percentage for that year to arrive at your net depreciation deduction. If the net number was […]
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Options for Education
Now that the 2015 tax season is finally done, we can now start focusing on getting our required education (for us CPAs) scheduled for this upcoming year. CPAs are required to get at least 40 hours of education each year. There is not a lot of education focused on farm taxation and succession planning, however, […]
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Limited Means Limited!
Many farm families have formed family limited partnerships or family limited liability entities over the last several years. These entities are usually formed to help with estate and succession planning. However, they can sometimes lead to disputes as one farm family in South Dakota found out. In 2002, the Gibson family formed a family limited […]
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Which is Better – Wages or Gifts?
My father was 47 when I was born and I am the oldest of three kids. My father “retired” at age 62 to start collecting social security, however, he could only earn a certain amount without having to pay the benefits back. My mother was the financial brains of the marriage and over the 3 […]
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Another Choice for Tax and Accounting Training
Since there is exactly two weeks left to tax season (thank-you Washington DC for your interesting holiday on April 15 – NOT), I got to pondering when my last full day off occurred. After much thought, it appears my last full day off was Sunday January 10. I expect no sympathy since this is what […]
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Potpourri
A reader reminded us that our post from yesterday might be a little misleading. We discussed the deduction of investment interest and we led off with borrowing against stocks and mutual funds, etc. held in a brokerage account being investment interest. Unlike borrowing money against your home using a home equity line of credit secured […]
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When to Take “Extra” Investment Interest?
I see many more farmers now with investment brokerage accounts. Some of these farmers have borrowed against these accounts and the margin interest paid is considered investment interest and the tax deduction may be limited. A farmer (or other taxpayer), trust or estate can deduct this interest only to the extent of net investment income. […]