Romney, Ryan and Saving the Golden Goose

[GreaTOne_65]

I sure wish I could be around when these jokers hit retirement, and finally wake up to a fixed income. They are in for a rude awakening, where they were dabbling in hundereds of thousands of dollars, it will be a culture shock of epic proportions.

[GreaTOne_65]

Why? You wouldn't believe it anyway! You know perfectly well, it has been inching up, despite the fokking GOP's obstructionism. HAHAHA

[dagwud]

Does anyone disagree that our tax code is a monstrosity of convoluted double talk that makes it all but impossible for the average Joe to figure their own taxes unless they have a simple 1099 / one pay check job with no house mortgage or medical expenses, donations, school expenses......

My father in-law retired from farming last year and is not a wealthy man by any means.  After a life time of farming he never once purchased a new combine or tractor.  He has a decent line of John Deere equipment but is not selling any of it this year based on the advice of his tax man since he will still have some grain sales income to claim on this year.

I fear the farm economy could drop in the next year and prices may fall on good used equipment which would cost him when he does have an auction.  However it remains better for him to take that risk then pay at a much higher tax rate if did sell his equipment this year.

What we need is for the two parties to work together to make the tough choices.

Yes entitlement spending can serve a very important and noble function but to much can end up causing the opposite effect that one had hoped for of helping people get back on their feet.

Tax breaks and loop holes can help create jobs and improve local, state or national economies but to many breaks can result in severe cuts to local, state or federal tax revenues.

I simply don't see either side being totally right or wrong and see both sides having some merit to their arguments.  This is where we need our elected officials to grow up and work together for the good of the country and make the tough choices required as opposed to kicking the can down the road so as to better improve their chances for re-election.

[Jim B. in Iowa]

I wonder if he could sell some of it on lease...so he takes a fifth of it a year as income?  Leasing companies seem to do it.

[Jim B. in Iowa]

Its a good think Obama never ran a company of any sort, so he didn't have to worry about where to park all the money he made. 

[Jim B. in Iowa]

Perhaps because its not a cost of doing business, but rather costs of living expenses.  Housing interest deduction is a bone they threw the middle class...hell many of them can't even deduct it because they use the standard deduction anyway.  Its just another of those things that sound great in the soundbites. 

I do NOT think farmers should be able to deduct their home living expenses because they are "forced" to live on the farm...but many of them do..through a corp.  My accountant says the IRS is really looking close at that and busted a bunch of clients from an Omaha attorney. 

[Red Steele]

anything with a motor should never be sold on a lease/installment contract. Take the money, pay the taxes and go on with life. Have to wonder about that tax advice....with the tax rates as low as they currently are, and with equipment values as high as they are, why would an accountant advise anyone not to auction off the equipment that is not being used currently and get the money? In a worse case scenario, the retired farmer is still going to keep two thirds of the proceeds, and values could very easily drop by a third or more in a year if corn drops under $4 a bushel like futures indicate is possible.

I would get a second opinion and see what the hypothetical taxes actually would be for a 2012 sale and weigh that against the risk of selling later and netting less.

I have been paying more in income taxes for the last three years than what I normally would expect to net and feel very good about it since I am not dwelling on the taxes I have been paying but rather on what is left after paying the taxes. These "Bush tax cuts" and "Obama Tax cut extensions" could not have come at a better time in my life. Great chance to get debt free and ready for the next bust cycle in agriculture. You don't want to go into a recession owing money...having money in the bank will shortly pay off when we get back to a tight money policy and get serious about the country's financial health.

[Nebrfarmr]

Dag, I agree, Most politicians seem to be more concerned on doing things that will get them re-elected, rather than what is best for the country.  On the student loan thing:  is it any coincidence, at all, that this Democrat-written student loan interest reduction bill, had a sunset clause, making the interest double, just in time for it to be an election issue?

Similarly, the Bush tax cuts expired at a time, when the Democrats felt obligated to extend them.

Politics from both sides, are poisonig most attempts to get truly beneficial things done, for the sake of the next elections.

[dagwud]

Red, I mentioned my / your concerns to my father inlaw about what if the farm economy takes a big drop but I hated to go any farther telling another man how to handle his finances.

Jim, the lease option would be nice as that is similar to what my brother and I did when our father retired from farming.  We bought the majority of his machinery over a five year period which made it better for us and our dad.

I wonder can a retiring farmer use income tax averaging to help lower the tax burden of that first year after retiring when they have no expenses while still having grain sales income?