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Ag Tax Update Available

By Gary Hachfeld, Extension Educator

“Ag Tax Update for Farm Families” is now available on the University of Minnesota Agricultural Business Management website at under Farm Tax and Legal Issues in the center of the web page.

The document includes descriptions of several ag tax issues of importance to farm families. Of particular note are the tax laws that were signed into law by President Obama on Friday, December 18, 2015. Most notable of those are the changes in depreciation which extends numerous provisions. The tax act permanently sets Code Section 179 depreciation expensing limit at $500,000 with a $2 million dollar overall investment limit before phase out. Both amounts will be indexed for inflation beginning in 2016. The amounts apply to the 2015 tax year. In addition, bonus depreciation for new or first use equipment has been reinstated under a phase down schedule. This first year depreciation schedule is 50% for 2015 through 2017, 40% in 2018 and 30% in 2019. 

Key to the depreciation deduction is that Minnesota does not fully allow the same deduction as the federal law. Minnesota tax payers will be affected by this for the next four years. If producers do not have enough income on the Minnesota return to offset the depreciation rolling to the current year return, the prior year depreciation will be lost. Check with your tax preparer on this issue.

Other important issues included in the tax update relate to the complicated tangible property repair rules and regulations, new guidelines for the 1099 and associated penalties, gross sales reported on the 1099-PATR, changes to the federal and Minnesota estate and gift tax exclusions and information about the affordable care act.

The last five pages of the update make up the appendix with several tables and charts listing 2014, 2015 and 2016 tax data. Items included are the 2015 and 2016 federal and state tax tables, 1040 individual tax standard deductions, alternative minimum tax exemption amounts, social security data and much more.

The tax update is free to the public simply by going to the U of M Ag Business Management website as described above. In addition to the ag tax update, the website includes information on land economics and land rent, legal issues, farm transition and estate planning, business planning, commodity marketing, farm financial and risk management, human resource management and more.

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