Farm Taxes
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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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“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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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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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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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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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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Standard Mileage Rates Drop 3.5 Cents Per Mile
The IRS just released final 2016 standard mileage rates for cars, vans, pickups and panel trucks late last week. The 2015 rate was 57.5 cents per mile and during our tax class in Des Moines last week, David Repp and I were betting how much the 2016 rate would decrease by. I thought it would […]
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Looks Like $500,000 Section 179 is Now Permanent
Although not passed yet, “The Protecting Americans from Tax Hikes Act of 2015” will likely be passed by Congress in the next day or two and then signed by President Obama. One of the key provisions for farmers is to make Section 179 permanent at the $500,000 level. Once equipment purchases total $2 million, then the […]
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One Year Later
We are hearing from various sources that the tax extender bill will not be done until likely this Saturday which will be December 19. Last year, the bill was signed on December 19, so if Congress passes it on the 19th and heads home, the tax extender bill this year will be even later than […]
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Inflation-Indexed Child Tax Credit Stymies Extender Bill
The tax extenders bill working its way through Congress continues to be stymied by a fight over indexing the child tax credit to inflation. Republicans in both chambers oppose this, but House Minority Leader Nancy Pelosi (D-CA) is driving this position and does not appear to want to back down. Pelosi believes that the Democrats have […]