The new 199A cooperative deduction is a source of uncertainty across the board for farmers and policy-makers alike.
According to Paul Neiffer, CPA with CliftonLarsonAllen, the new cooperative deduction is at least five times greater than the non-cooperative sale. When it was created, legislators did not realize how the deduction would indirectly affect others and are now trying to fix the issue.
“I certainly would not be doing a lot of entity planning based on the way the law is written now,” says Neiffer. “We just don’t know what’s going to happen.”
Neiffer does say there are strategies to help decrease taxable income through investments but it is more important to look at each individual farmer’s situation.
“For farmer’s at least, there’s a lot more potential to get their income down but part of it, right now, the farm economy is already doing that for them,” says Neiffer. “We’d rather have their farm income really be up here, and then we can take advantage of tax law.”
