Tax Strategies

December 11, 2009 04:01 PM

As 2009 nears an end, it's time to think about tax strategy. Your accountant, with input from the Pro Farmer Tax Strategy Report, can help you devise a plan based on your circumstances. The goal of the report, which was written by Chris Hesse, a CPA and expert in agricultural tax matters, is to help you achieve the best tax results—which isn't necessarily the lowest amount due.

Here are a few highlights of the Tax Strategy Report:

  • Cash-basis farmers have the best chance of achieving the target level of income to use personal tax deductions, manage swings in income so they're not thrown into a higher tax bracket and plan so that their estate tax is reduced or eliminated. Adopt plans early and revisit them each year. Farmers with tax losses need to know what can be done to make the Internal Revenue Service refund taxes paid within the previous five years.
  • Incorporating continues to be a benefit for some farmers. With proper planning, the farmer can put another $50,000 in the 15% tax bracket and may deduct meals consumed on the farm premises together with housing costs. A reduction in self-employment tax is a benefit when the corporation leases land from the stockholders.
  • To personally benefit from their corporation's working capital, some farmers buy land with their corporation. This locks up the land inside the corporation; a sale of appreciated land will be taxed using corporate income tax rates. Read the Tax Strategy Report for ideas on how to use corporate funds to acquire land without trapping the land inside the corporation.

Hot Tips

The Pro Farmer Tax Strategy Report provides analysis on:

  • Section 179
  • Section 199
  • Bonus depreciation
  • Averaging farm income
  • Carrying back net operating losses
  • Accelerating or deferring deductions and income
  • IRA-to-Roth conversions
  • Benefits of incorporating
  • Self-employment tax
  • Paying wages in the form of commodities
  • Gifting commodities
  • The future of farm income tax and estate tax provisions
  • Alternate entity structures

To order, call (800) 772-0023 or e-mail Cost is $39 for Pro Farmer members and $99 for non-members.

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