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Honored Advisor
Posts: 7,494
Registered: ‎07-18-2011
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Re: globalized......no we are not

Jim I have seen it done without borrowed  money and seen it done with borrowed money.  Whether that debt is against land, equipment, or inputs, that remainder grain that is stored faces a tax liability if sold at a higher % rate than the interest rate on borrowed debt or the income available as cash.

 

Anyway tax liability is the trade off.  It is situational.  And IMO the reason for storing long term is low prices (after sales are made to cover deductable expenses) .  Storing grain in high prices is limited to a tax management tool that slides income into the future and can become long term if good years come in bunches.  But in sw area production problems will eventually come....come hail or no water.  It is a form of income averaging with pre tax bushels.

 

It fits the current Fed policy.  Keeping interest low.