Since there is about one week to go in the year, we thought we would present a quick checklist for accounting and tax related items:
- Make sure that all checks for 2012 expenses are written and mailed by December 31
- Make sure that any gifts made at year-end are deposited into the donee's account before year-end
- Make sure that all equipment bought before year-end is available for use. Simply writing a check to the dealer does not make the equipment eligible for depreciation in 2012. The equipment must be placed in service by December 31, 2012.
- Properly deposit all grain and other crop sale checks by year-end or denote in your accounting system as deposits-in-transit. These items are income if you have constructive receipt by year-end. Simply waiting to 2013 to deposit will not delay income recognition.
- Have your budget prepared for 2013. If you wait until January to start, that is too late.
- Review your deferred payment contracts. Do you have the right mix to allow you to increase your 2012 income if needed. Remember, the Fiscal Cliff may happen, but it may be very late into 2013 before we know for sure. Make sure you have income tax flexibility.
- Review your prior three year's tax returns. Have you used farm income averaging in the past. With this year's expected large increase in farm income, make sure you know if you qualify. Also, for 2013, farm income averaging may get you out of any tax increases.
- If you have installment sales from prior years, have you reviewed electing out of them to lock in the lower rates now. Certain steps must be taken before year-end. Review those with your tax advisor.
- Have you reviewed your crop insurance reporting options. You may need to perform certain steps before year-end. Check with your tax advisor.
There are some of the major items that should be done before year-end. If any apply to you, make sure you know what to do and it would not hurt to touch base with your tax advisor. We would rather have you talk to us now that wait until January 2 when it might be too late.