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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Use of a CRT for Retirement Income - Update

Dec 21, 2011

In my post yesterday, I need to clarify one tax aspect of the post.  When a farmer contributes all ordinary income assets such as unsold grain, farm equipment, etc. the deduction that the farmer may get is limited to his cost basis in the assets.  Since unsold grain for a cash basis taxpayer has a basis of zero and most farm equipment has been fully depreciated, there may be little or no tax deduction by creating the CRT.

However, the power of the CRT is the deferral of the income from the sale of the grain and the equipment, not the income tax deduction on creating it.

Thanks to a reader for catching this for me.

 

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