The following information is bonus material from Top Producer. It corresponds with the Moneywise department. It can be found on page 8 in the September 2008 issue.
Farm Bill Tax Breaks
In addition to the tax breaks mentioned in the printed magazine, here are two more:
CRP Payments to retired farmers. Conservation Reserve Program payments are no longer subject to the 15.3% self-employment tax if the taxpayer is also receiving Social Security retirement or disability benefits. This provision resolves a longstanding dispute between taxpayers and the IRS.
Limitation on excess farm losses. Farmers who receive farm program payments now cannot deduct more than $300,000 ($150,000 for married taxpayers filing separately) from non-farm income. Any losses that exceed the farmer's net farm income for the previous five years also are disallowed. For example, a farmer with $500,000 of net farm income over the previous five years, who then suffers an $800,000 farming loss, could deduct only $500,000 of the farming loss from non-farm income. This provision goes into effect in 2010.
Producers are well advised to discuss these and other tax law changes with their tax professionals.–Allen H. Olson
Allen Olson is an agricultural lawyer with Moore, Clarke, DuVall and Rodgers, P.C. in Albany, Georgia.
$5 Corn Costs Next Year
This file includes both the assumptions used by AgStar Financial Services in calculating expected returns and the chart that gives an idea where breakeven yields and prices lie for soybeans.