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Veteran Advisor

Some Farmers Don't Have A Tax Problem?

Do you have a farm tax problem? Some do not, one farm manager told me at the Land Investment Expo, today.

 

Full story:   Some farmers don't have a tax problem

 

 

What say you?

 

 

Thanks,

 

Mike

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3 Replies
Honored Advisor

Re: Some Farmers Don't Have A Tax Problem?

Marketeye, someone (me) that used section 179 and bought paint to lessen tax effects of $7 corn, bought land, that all has to have payments made with after tax dollars.   If someone (not me) was disciplined enough to sell the $7 corn and pay taxes and just basically always send 1/3rd of their income to the government and stay out of the friendly banker`s office, they probably don`t have a tax problem, they farm with a M Farmall, but don`t have a tax problem  Smiley Happy

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Veteran Advisor

Re: Some Farmers Don't Have A Tax Problem?

This is a potential big deal.  20% is 20%.  If that was to eliminate the DPAD (S. 199), then depends on who qualifies for actually using the deduction for either DPAD or the xx%.  If non-coops don't have access to passing thru this DPAD now, then no harm done if the xx% is similar to the DPAD deduction percent currently allowed.  Of course, if the farmer doesn't have farm employees, then didn't qualify for DPAD before, so little guys didn't benefit even though they were otherwise just as much a qualifying producer as larger farmers with employees.  So, get rid of DPAD (S. 199), keep the coop requirement due to the reasons all this was set up in the first place, make the new xx% similar to the % limitations under DPAD, and get rid of the "farm employer" requirement.  Of course, IRS wants to keep something in place that requires the grain buyers to report annual grain sales to the IRS, go figure, might as well get something out of it.

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Honored Advisor

Re: Some Farmers Don't Have A Tax Problem?

It all depends Mike..... For me probably no tax issue anyway so it might help someone.... I just have this gene that says "What will the coop do in response?"  I would look for more storage fees and more quality deductions, more handling charges....etc etc.

 

I am fortunate enough to have end users and choices of where to sell...... with ethanol many of us do... and I think the excessive fees, basis, and storage charges of merged coops already eat up half or more of that tax gain..... since it is only on the net income sales, maybe more.

But for those who do not have the luxury of bypassing the local "market", this may be a very nice benefit..... and for coop boards that were in trouble with the loss of historic basis trends the last two years.... maybe it will help as well...

 

A couple of statements were made in the article that seemed questionable (or assumptions) 

1 Quote "There is agreement amongst the authors of the provision to fix it."  Is that true or just mr Hanagan's clients hope?  I think there were solid reasons to try to fix the damage being done to Grain coops by the Ethanol Industry that bypasses the coop for a lot of their purchases.  Coops need volume---- farmers need margins.

 

2.  The farm manager............says it right.... If your needing tax relief at these grain prices as a producer, your not thinking.  There are a multitude of ways to manage taxes and many of them will enhance future income...... Taking less for your crop to get a tax deduction is not high on the list.

3.  The insinuation of congressmen wanting to correct a problem created that might have hurt ADM might tell us something,,,,,, who the lawyers clients are.......... there are still congressmen that care more about fundraising from multinational companies than votes at home.........or that the lawyer thinks he can pressure with donations....... or the threat of loosing them.

 

This is a change that is not worth fixing, and in a few locations might help, or give the appearance of help to a coop.  

 

IMO  It is one of those provisions in law that sounds a lot better than it is.  The change won't change the flow of grain much.

 

 

Since the lawyer was most likely, lobbying his clients position,  did they have to pay him a speakers fee?

 

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