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Friday, December 29, 2017

Revised version of "Ag Income Tax Update for Farm Families" is now available

A revised version of “Ag Income Tax Update for Farm Families” is now posted on the University of Minnesota Extension Ag. Business Management website.  The revised fact sheet is posted on the Farm Tax and Legal Issues page (please see link below).
This revised version addresses farm tax issues that will impact producers for the 2017 income tax year.  The recently passed tax reform has a very limited effect on a producer’s 2017 tax return.  I’ve confined the discussion in this document to what matters for 2017.  I will address the components of the new tax reform legislation later in the spring. 
Please feel free to contact me via email if you have any questions.  My email address is:
I want to wish everyone a safe and prosperous new year!
Thank you.

Rob Holcomb

Wednesday, December 27, 2017

Southwestern Minnesota Farmland Values Decline 6.1 percent in 2017

By David Bau, Extension Educator

At the end of each year for the last twenty-three years, a survey has been conducted of farm land sales in fourteen southwestern Minnesota counties.  The survey reports bare farm land sales to non-related parties for the first six months of each year. Land values had been steadily increasing until 2014.  After reaching record high prices in 2013, the upward trend was broken as prices declined in 2014.  The downward trend continued through 2017.  The summary report for this survey is available at the county extension offices in Chippewa, Cottonwood, Jackson, Lac qui Parle, Lincoln, Lyon, Martin, Murray, Nobles, Pipestone, Redwood, Rock, Watonwan and Yellow Medicine Counties.  This year the decline across the fourteen counties averaged 6.1%.  Average land values had not declined since 1996 when the average SW Minnesota land prices were $1,175 per acre in 1995 to a high in 2013 to $8,466 then declined in through 2017 to $6,340.

Data from these counties indicate prices decreased from an average of $6,751 in 2016 to $6,340 in 2017 or a decrease of 6.09%.  This is only the fourth decrease as far back as this data has been collect since 1995.  In 2013 was the largest year to year increase of 35.6%.  Farmland prices decreased in eight counties and while increased in six counties including Chippewa, Cottonwood, Jackson, Lac qui Parle, Redwood, and Yellow Medicine from 2016 to 2017.  There was a lot of variability in the numbers from 2016 to 2017.  The largest increase was in Lac qui Parle County with an increase of 22.0% while Rock experienced the largest decrease of 29.8% for the sales that met the bare farmland to non-related party transaction requirements.

Rock County had the highest average sale price of $7,545 per acre and Lincoln the lowest at $4,415 per acre.  The average Crop Equivalency Rating (CER) for the fourteen counties was 69 with the highest price per CER in Chippewa County at $101.20 and the lowest in Lincoln County at $76.12 per CER.  The assessed values for the third year in a row were higher than actual sales price with the assessed value at 103 percent of the sales price.  Historically the assessed value would be 75 to 80 percent of the sales value.  Nine counties experienced average sales prices that were lower than the assessed values in 2017.  While five counties experienced average sales prices that were more than the average assessed values, the lowest percentage was 90.01% in Lac qui Parle County.

Each year sales vary within a county and be closer to a larger city which would have an effect on these average values from year to year.  The quality of the land sold within a county may be a factor in the wide swings in the prices from year to year in individual counties. The number of sales in each county varies greatly from year to year.  The 6.1% decrease is well below historical increases of 1 to 2 percent.  For the last ten years there have been large percentage increases.  In the eight years before 2014, prices increased at an annual rate of 15.3%.   There are several factors that have an effect on land values.  Farm incomes, grain prices, interest rates, return on other investments and 1031 exchanges are often mentioned as reasons for the increase.  Farm profits were weaker in 2013 and turned negative in since 2014 with lower commodity prices.  There were good to record profits in the Southwest Minnesota Adult Farm Management program, from 2005 through 2012.   During 2013, half the farms in adult farm management in Southern Minnesota lost money on corn production.  This loss has continued through 2017. Many hog and dairy producers experienced a tough year in 2010 many with losses instead of profits with poor prices for their commodities and high feed costs. 

If the average farmer had losses from 2014 through 2017, this would soften local demand for the land from farmers.  Interest rates continue at historically low levels although are slowly increasing and land rental income is comparable or higher than what an investor can earn from treasury bills, bonds or certificates of deposit at financial institutions.   The stock market rebounded significantly since its low in March of 2009 to current record levels.  The 1031 exchange is for farmers or property owners who have land in an area of increased value due to location to city or development and rather then pay taxes on large gains from the sale of land they purchase like property or other farmland at a more reasonable price elsewhere, which increases rural farmland demand. 

The reason for increases or decreases in farm land sales prices is a combination of all of these factors.  If you would like a copy of the two page document on the trends in farm land sale prices, contact your local county Extension office at any of the fourteen counties listed above.

Which direction will farm land values go depend on several factors?  Supply and demand will determine this. The simple return on investment which is determined by rental rates will determine how competitive farm land is compared to other investments and this will determine a value for farm land.  Corn and soybean prices for 2018 crop are much lower than previous years.  This should have an impact on profits, farm rental rates and eventually farmland values.  The government programs have an influence as well through the farm bill.   If interest rates rise or farm rental rates fall, the value of land is sure to be affected in a negative way and that will cause a decrease in land values.  The table below indicates average land prices from 2012 to 2017.



Friday, December 22, 2017

Cropland Rental Rates Compared to Corn and Soybean Price Change

By David Bau, Extension Educator

In Table 1 below I compare the changes in average farmland rental rates to the annual changes in corn and soybean prices. I did to determine how closely farmland rental rates follow the changes in corn and soybean prices.

Column 1 lists the years used for comparison starting in 2000 going through 2016.  Column 2 lists the average cash corn price each year in Worthington Minnesota. Column 3 lists the average cash soybean price in Worthington. Column 4 lists the change in the average corn and bean prices from the previous year. Column 5 is the average rents paid by roughly 1200 farmers each year who participate in adult farm management programs across southern Minnesota. Column 6 uses the previous year’s average rent in column 5 multiplied by the following year’s change in corn and soybean prices to compute a projected rent and does that for each year. Column 7 starts with the average rent in 2000 in Column 5 of $98.31 and multiplies this number by next year change in corn and soybean prices of -3.21% to estimate a average rent of $95.16 and then uses Column 7 average rent multiplied by the percent change in corn and soybean prices the next year.

In Column 5 you can see the average rents slowly increased from 2000 through 2013, the last year corn price were above $6.00 and soybeans almost averaged $14.00.  Then as prices moved lower so did the average rents. If compared profitability numbers to average rents, it would indicate rents are slow to go up in the good profit years and slow to go down in the poor profit years.

If you compare column 5 with column 6, averaged rents are much more volatile in Column 6 and this corresponds to the dramatic changes in corn and soybean prices each year in Column 3.  If you compare the rents in Column 5 to the rent in Column 6 you will find less than $2.00 per acre difference in the average rents from 200-1 through 2016 indicating the strong relationship between rents and cash prices for corn and soybeans.

The last column is even more reactive than column 6 to the price changes and these rental rates were much higher when prices were increasing. There were much higher rents that did follow the higher end rents paid in many southern Minnesota counties.


When examining these figures, you can see a very strong correlation between rental rates and the average cash prices for corn and soybeans.



Wednesday, November 22, 2017

REVISED Producer Ag. Income Tax Webinars



November 29, 2017

The Producer Ag. Income Tax Webinar originally scheduled for November 27, 2017 has been rescheduled for Friday, December 8, 2017.

University of Minnesota Extension will be holding two, 60-minute webinars for agricultural producers.  The content of these webinars will be geared toward farm operators and managers.  Farm management instructors and agricultural professionals may also find the content useful.  This webinar will not qualify for Continuing Professional Education (CPE) or Continuing Legal Education (CLE) hours. 

The two webinars will be held on:

Friday, December 8, 2017 -- 1:00 PM to 2:00 PM CST (Rescheduled from Nov. 27)

And

Friday, December 15, 2017 – 1:00 PM to 2:00 PM CST

Tentative Topics to be covered:

1.    Standard deductions/exemptions
2.    Tax rates for 2017
3.    Depreciation
4.    Domestic production activities deduction
5.    Avoiding and dealing with a net operating loss
6.    Estate and gift tax issues
7.    New Minnesota young farmer credits
8.    Disaster payments and crop insurance
9.    Prepaid expenses
10. Conservation Reserve Program
11.  Brief overview of the House and Senate bills addressing tax reform


Both of the scheduled webinars will be identical.  The instructor for both programs will be Rob Holcomb.  Rob is Enrolled Agent and Extension Educator in Ag. Business Management with University of Minnesota.  Rob heads up the Tax Education programs for the University of Minnesota.

There will be no cost for participating in the tax webinars.   The webinars will be delivered via WebEx software.  Please see the links below for access to both  meetings.

Ag. Tax Webinar.  Friday, December 8, 2017 -- 1:00 PM to 2:00 PM CST


Ag. Tax Webinar.  Friday, December 15, 2017 – 1:00 PM to 2:00 PM CST



Handouts for both webinars are posted at the links below.  It is suggested that participants download the webinar handouts before the start of the webinar.  The Power Point file is provided as either black & white or full color.




Please direct questions to Rob Holcomb.

Thank you.

Phone:  507-337-2807

Email:  holcombr@umn.edu

Tuesday, October 31, 2017

USDA Average County Rents Published in September

By David Bau, Extension Educator

The National Agricultural Statistic Service with the USDA released the county farmland rental rate estimates for 2017.  After increasing continuously since 2007, statewide average rents went down for the third year in a row. The state average cropland rental rates declined from $185 in 2014 to $180 in 2015 to $170 in 2016 to $166 in 2017, as indicated in Chart 1 below.  This represented a 2.4% decrease from 2016 to 2017 and 5.5% decrease from 2015 to 2016 and 2.7% decrease from 2014 to 2015  Previously rental rates had a 4.5% increase from 2013 to 2014, 18% from 2012 to 2013 and 11.1% from 2011 to 2012.

Statewide Irrigated rental rates declined from $210 in 2015 to $185 in 2017 almost a 12% drop.

Pasture rent average increased from $26 per acre in 2014 to $28 per acre in 2015 to $30 in 2016 and 2017 or an increase of 7.1%.


Table 1 below lists the actual farmland rental rates by county from Adult Farm Management Records.  Since farmers and landlords are starting to negotiate 2018 farmland rental rates and the last actual numbers available are for 2016, I have listed estimated rental figures for 2017 and 2018.  For 2017 I heard many times, that rents were down $10 to $20 per acre, although some rents went up and some remained the same.  In Table 1 below, I estimated a 2.5% decline in 2017 from 2016. What direction should 2018 farmland rental rates go?  In the table is an estimated 2.5% decline in rental rates from 2017 to 2018 due the continued decline in corn prices.

The column third from the right in bold is the latest 2017 USDA county estimate.  Property taxes increase although assessed values are starting to decrease and the Minnesota legislature passed a subsidy to offset some school referendum costs. Profits continue being squeezed by low commodity prices that do not cover all of their costs.

It will be a very challenging year for both the landlord and farmer to determine where the 2018 farmland rental rate should be? Up? Down? or Constant?
 


Friday, October 13, 2017

What is a Fair Farm Rental Agreement?

By David Bau, Extension Educator

Landlords, Farmers, Agri-Business Professionals should make plans to attend one of the informative meetings being held across Central and Southern Minnesota.  These free meetings are being provided by the University of Minnesota Extension.  Farmer profits are low or negative and farm land rental rates declined slightly while commodity prices have decreased significantly. Determining a fair profitable farm rental agreement is a challenge in today’s economy with recent record corn and soybean prices and record farm land values as recently as 2012 but commodity prices continued to decline since then.

Negotiating a fair rental agreement that satisfies the land owner and the farmer is a challenge.  David Bau and Nathan Hulinsky, Extension Educators in Ag Business Management, will provide several ways; by examples, factsheets and worksheets to determine a fair farm land rental rate for both parties.

Topics covered at the meetings will include local historic and projected farmland rental rate trends, current farm land values and sales, a worksheet that will help determine a fair rental agreement.  Input costs for 2018 will be presented along with current 2018 corn and soybean prices.  Worksheets will examine 2018 costs and what is affordable rent that a farmer will be able to pay in 2018, the rate of return to the landlord at current market values and examine flexible rental agreements.

Make plans to attend one of these forty-two meetings now.  Attendees will receive several informative worksheets and factsheets that will help to determine what is a fair 2018 farm land rental rate is.

The meetings will be held in Ada, Albert Lea, Alexandria, Albert Lea, Benson, Blue Earth,   Buffalo, Caledonia, Chaska, Clearbrook, Cold Springs, Cologne, Crookston, Elko New Market, Faribault, Farmington, Foley, Gaylord, Hutchinson, Jordan, Le Center, Litchfield, Little Falls, Long Prairie, Madison, Mankato, Grygla, Olivia, Owatonna, Pipestone, Preston, Red Lake Falls, Rochester, St. Charles, St. Peter, Slayton, Sleepy Eye, Waseca, Willmar, and Worthington starting in Slayton on November 3, 2017 and ending in Pipestone on December 19, 2017.  Check out the Agricultural Business Management calendar on web at: www.extension.umn.edu/agriculture/business/ for specific times and locations.

Wednesday, October 11, 2017

What Direction will 2018 Farmland Rent Go? Stay the Same? Up? or Down?

By David Bau, Extension Educator

Each year I put together tables listing actual farmland rental rates by county from Adult Farm Management Records.  Unfortunately farmers and landlords are starting to negotiate 2018 farmland rental rates and the last actual numbers available are for 2016 so I am forced to estimate figures for 2017 and 2018.  When I did this last year I used an estimate of a 10% decline and the actual figure came in at 2.5% decline statewide.  For 2017 I heard many times that rents were down, although some rents went up and some remained the same, in table 1 below I estimated a 2.5% decline in 2017 from 2016.

But what direction should 2018 farmland rental rates go?  How do I determine an estimate for 2018 farmland rental rates?

Should they stay the same? 
Landlord property taxes continue to increase. While the state legislature help with some of the school referendum costs they still increase taxes.  If rents stay the same, a landlord’s income will go down if taxes increase and if taxes are not increasing the revenue to the landlord will remain constant, when they have grown accustomed to significant increases since 2007.

Should they go up?
Landlord expenses increase as property taxes increase and they want to pass this cost increase onto the farmer and increase the rental rate.  Another example might be where there has been a long term lease in place where the rental rate has not changed for many years and this rate might be considered low today and due for an increase.

Should they go down?
Farmers have experienced decreasing corn and soybean prices since record high prices in
2012 for corn and 2013 for soybeans and current prices offered for 2018 corn and beans are below what farmers sold their grain for in 2007, when rents were $125 per acre.  Average production budgets for 2018 indicate losses for farmers if rents are above $122 per acre.

With the average rents in Table 1 in 2016 averaging $212 per acre, to go down to $122 per acre would be over 42% reduction in average rents.  The average Southwestern Minnesota corn farmer has lost money for three consecutive years and soybeans lost money in 2014 and 2015 and made money in 2016.  The results for 2017 corn and soybeans look to be negative again.

So you could make an argument for all three scenarios, but looking at the economics for corn and soybean production in 2018 using 180 bushels per acre, yield and $3.25 price per bushel, for corn and 50 bushel yield and $9.00 price for soybeans, income would be $585 for corn per acre and $450 for soybeans. With average cost projected to be $511 for corn and $281 for soybeans before rent and labor, this would leave $74 per acre for corn and $169 per acre for soybeans to be shared between the landlord as rent and the farmer and income. This would be an average of $122 per acre to be shared.

So I projected a 2.5% decline in rental rates from 2017 to 2018 for figures listed in Table 1.

But from earlier examples 2018 farmland rates could go down by over 42% or increase from 2016 rates depending on the individual situations.  It will be a very challenging year for both the landlord and farmer to determine where the 2018 farmland rental rate should be.


2016 ARC-CO Payments for Minnesota

By Curtis Mahnken and Bob Craven, Center for Farm Financial Management, Applied Economics

The Farm Service Agency (FSA) recently released 2016 county yields for corn, soybeans and wheat. These yields along with the marketing-year-average (MYA) prices which were released in September provide the information needed to calculate Agricultural Risk Coverage-County (ARC-CO) payments. These payments will be made in October 2017.

ARC-CO triggers a payment based on a crop’s base acres if the actual county revenue for that crop is less than 86% of the “benchmark” revenue. For corn, the MYA price (Table 1) is almost 30% lower than the benchmark price. Payments will be made in counties where the 2016 yield is up to 22% above the county benchmark yield. For wheat, payments will be triggered in counties where their yields are up to 48% above the benchmark yield.

Table 2 includes the payments per base acre by county for corn and wheat. These numbers have been adjusted to reflect the 6.8% reduction for budget sequestration. For soybeans, there are only two counties in Minnesota that will receive ARC-CO payments, Kittson ($12) and Lake of the Woods ($19).

The variability in payments between counties are a result of differences in the 2016 crop yield compared to the county benchmark that is based on 2011-2015 yields. There is significant variation not only in the 2016 yields but also in the benchmark yields between the counties. Counties with a high yield compared to their benchmark will not receive payments.

To calculate the payment for a farm, multiply the base acres by the payment for that county. A farm in Waseca County would receive $29 per base acre for corn. With a 300 acre corn base the payment would be 300 x $29 = $8,700.





Monday, October 2, 2017

New Opportunities for Minnesota Beginning Farmers and Farm Asset Owners Who Want to Help Them

By Don Nitchie, Extension Educator

Beginning in 2018, there are two new opportunities available which can be very helpful to beginning farmers in Minnesota. These programs are the Beginning Farmer Incentive Credit for existing farm asset owners who rent or sell assets to beginning farmers and the Beginning Farmer Management Credit for the beginning farmer enrolled in an approved farm business management program. These tax credits can reduce an individual’s Minnesota income tax. The programs were created by the Minnesota Legislature during the 2017 Special Session. According to MDA, current legislation funds these programs through 2023.

According to the Minnesota Department of Revenue posting of June 6, 2017, the beginning farmer incentive credit is a tax credit for owners of agricultural assets. Such assets may be land, livestock, facilities, or machinery located in Minnesota. The assets must be sold or rented to a beginning farmer who is not a family member of the asset owner, as defined in the Internal Revenue Code. Seven eligibility requirements are listed for beginning farmers and are listed below. The credit equals 5% of the sale price of the asset (up to $32,000), 10% of the gross cash rental income in each of the first three years of a rental agreement (up to $7,000 per year), or 15% of the cash equivalent of the gross rental income of the first three years of a share-rent agreement (up to $15,000 per year). If the amount of the credit exceeds tax liability, the excess may be carried forward 15 years. Equipment dealers do not qualify for the credit. The total value of credits allocated by the Rural Finance Authority is capped at $5 million for tax year 2018 and $6 million per year in later years. Certificates for the credit will be issued on a first-come first-served basis, but with preference for some re-certifications. The beginning Farmer will need to participate in a farm business management education program.

The beginning farmer management credit is equal to 100% of the cost of participating in a financial management program approved by the Minnesota Rural Finance Authority (up to $1,500 per year). The credit can be taken for three years directly reducing Minnesota Income tax due for the beginning farmer. If the amount of the credit exceeds tax liability, the excess may be carried forward three years.

Wednesday, September 27, 2017

Make Time for Planning

By Betty Berning, Extension Educator

There is always a lot to do and it is easy to wonder where time goes.  In the midst of milking cows and making hay, management activities, like working on a transition plan for the farm or writing up an animal welfare policy, are frequently set aside.  That is why it is so important to MAKE time on a regular basis (ideally weekly) to work on these strategic activities.  Just like an exercise program, if you don’t make time for these items, activities that are more urgent will consume your time.  It takes discipline to commit to a regular time to work on management activities.

Management of your business is important.  By carving out time to regularly work on your business’ strategy and goals, you set the course for your farm and can proactively respond to changes.  This can help your farm to survive in the future.

One management task I suggest beginning with is a business plan.  Does your farm have a business plan?  I recommend that every farm have a business plan, especially those that are new, expanding, or making major changes. 

A business plan is simply a statement of business goals and a roadmap to how those goals will be achieved.  Think of it as a blueprint for your farm.  It sets the direction of where your business is headed in the future. 

By creating this plan, you can effectively communicate what your farm is about to others. Do you farm with other family members?  A business plan can help all of you discuss and align on goals for your farm.  Do you work with a lender?  You farm’s plan can be shared with your lender to help him/her understand your farm’s vision and goals.

There are several sections to a business plan:  executive summary, business description, production management, personnel management, marketing management and financial management.  It takes time to write your first plan.  After you have a plan in place, though, it becomes a living document that you can use.  If you want to make changes to it, it is easy to update.  Because it’s an important piece of YOUR farm’s business, I strongly suggest that you (or your leadership team) write this document.  You know your business best and can best describe its goals.  A brief synopsis of each section follows:

  • ·         Executive Summary:  I like to think of this as the bow on a present.  It wraps everything up and presents it in an easy to understand format.  Often times this may be the only section that is read.  It is here that you’ll want to summarize your business and its goals. 
  • ·         Business description:  This is a great place to start.  Many people find this to be the easiest section to write because you simply write about your farm.  For example, you may write about the size of your farm, where it’s located, what you produce, your ownership, or your history.   Think about what you’d want someone to know about your farm as you write this section.
  • ·         Production management:  Some people call this operations management.  This is the nuts and bolts of how you run your farm!  In this section, you describe what you produce and how you produce it. 
  • ·         Personnel management:  Here you describe the organizational structure of your farm.  You may be laughing, thinking, it’s just me!  That’s okay.  This section will be short for you, but it’s good to write that you are the sole proprietor and list any help that you have.  If you have a profitability team or advisory committee, include them, too.  For larger farms, list your employees.  Describe the different jobs on the farm and each person’s responsibilities. 
  • ·         Marketing management:  This section can be about how you sell your grain or milk, or if you sell products directly off your farm, it might be your plan for how you effectively sell these products.  For most dairy farms, this is the place to write about whom you sell your milk to and your selling strategy.  You can also include an analysis of market trends or describe a competitive advantage (e.g. being organic or grass-fed) that your dairy may possess.
  • ·         Financial management:  If you are creating your plan because you’d like to request a loan from your lender, this is the section for you.  Here you’ll want to include financial history, financial projections, financial statements, and your capital request.  It may also be helpful to include benchmarks against other dairies that are similar to yours.  It is here that you can illustrate if your farm can financially handle an expansion or change.


All of this may seem overwhelming.  There is a great tool available from the Center for Farm Financial Management at University of Minnesota called AgPlan (agplan.umn.edu).  This tool will help you create your own business plan for your farm.  There are tutorials and resources available that provide in-depth detail on each of these sections.  It can help you determine what you want to include in your plan!  It also allows you to share your plan with others, so that you can edit it between family members and business partners.


By completing a business plan, you begin to shape your farm’s strategy.  This exercise will help you identify where to spend your management activity time. Take time every week to work on becoming a better manager.  With discipline, you will find the time to do this and your farm will benefit!

Thursday, September 7, 2017

2017 Agricultural Tax Issues Course
Locations and dates for
Agricultural Tax Issues Course

University of Minnesota Extension is offering an agricultural tax school in late September and early October.  This course targets income tax professionals that work with farmers.  Additionally, this course will benefit agricultural professionals such as agricultural lenders and farm management instructors. The agricultural tax school will be offered in five locations and the course has been approved for eight hours of continuing professional education.

Locations and dates for Agricultural Tax Issues Course:

St. Cloud, Minnesota
Tuesday, September 26, 2017
The Tuscan Center
3333 West Division St., Suite 116
St. Cloud, MN 56301

Rochester, Minnesota
Wednesday, September 27, 2017
Kahler Apache Hotel and Water Park
1517 16th St. SW
Rochester, MN 55902

Marshall, Minnesota
Thursday, September 28, 2017
Ramada Inn Conference Center
1500 East College Dr.
Marshall, MN 56258

Crookston, Minnesota
Tuesday, October 3, 2017
Crookston Inn
2200 University Ave.
Crookston, MN 56716

Fergus Falls, Minnesota
Wednesday, October 4, 2017
Bigwood Event Center
925 Western Ave.
Fergus Falls, MN 56537


This course targets income tax professionals that work with farmers.  Additionally, this course will benefit agricultural professionals such as agricultural lenders and farm management instructors.

Course Topics:
1.      Legislative Update
a.       Information reporting
b.      Income tax basis
c.       Due dates of tax returns
d.      Table of expiration dates
2.      Miscellaneous Agricultural Tax Issues
a.       Livestock transactions
b.      Form 1099-MISC
c.       Net investment income tax
d.      Inherited property
e.       Oil and gas payments and deductions
f.        Repairs
g.      Revoking a CCC loan election
h.      Marketing gain on CCC loans
i.        Going out of business
j.        Farm casualty gains and losses
k.      Casualty repair costs
l.        Children of farmers and the “Kiddie” tax
m.    4-H and FFA members
n.      Safe harbors for farmers
3.      Income Issues
a.       Commodity futures and options contracts
b.      Deferred payment contract losses
4.      Farm Employees
a.       Employee vs. independent contractor
b.      Payment of wages with commodities
c.       Employer-provided meals and lodging
d.      H-2A agricultural workers
5.      Self-employed tax and social security benefits
a.       Interaction of self-employment tax and social security benefits
b.      Farm optional method for computing self-employment earnings
c.       Self-employment tax on land rented to an entity
6.      Depreciation and I.R.C. Section 179
a.       Depreciation and section 179 expensing
b.      Related parties and depreciation
c.       Irrigation systems and water wells
d.      I.R.C. section 179 recapture
7.      Deduction Issues
a.       Prepaid farm expenses and deposits
b.      Prepaid expenses: change of plans
c.       Promissory note to supplier
d.      Deducting interest on loans secured by the residence
e.       Lease vs. purchase of equipment
f.        Improvements installed by lessee
g.      Demolition of a farmstead
h.      Deducting cost of growing crops purchased with land
8.      Farm-related Income Reported on Form 4797
a.       Depreciation recapture
b.      Depreciation recapture from assets received as a gift
c.       Net I.R.C. Section 1231 loss
9.      Like-kind exchanges
a.       Like-kind exchange of equipment
b.      Like-kind exchange of livestock
c.       Depreciation of cars, vans and trucks
d.      Like-kind exchange tenancy-in-common
e.       Like-kind exchange of Conservation Easements
10.  Rulings and Cases


TIME SCHEDULE:
Registration: 7:30 a.m. – 8:00 a.m.
Class:  8:00 a.m. – 5:00 p.m. (with a one-hour break for lunch**)
** Lunch will be provided as part of the course (This is a change from previous years).

FEE:
The fee for this 8-hour course is $180.00 and includes refreshments and course materials.

MATERIALS:
Participants will receive the 2017 Agricultural Tax Issues book authored by Philip E. Harris, Professor Emeritus from the University of Wisconsin-Madison/Extension.

By attending this course, you will earn:
·         8 Federal Tax update credit hours*

INSTRUCTORS:
Rob Holcomb, EA, Extension Educator in Agricultural Business Management, University of Minnesota Extension

Nathan Hulinsky, Extension Educator in Agricultural Business Management, University of Minnesota Extension.

REGISTRATION:     
Registration for the agricultural tax course will be conducted through the University of Minnesota College of Continuing Education.  Below is a link that may be used to register for each of the respective locations.  The deadline for registration is Friday, September 8, 2017.  For more information or questions, please contact Rob Holcomb at holcombr@umn.edu or by calling 507-337-2807.


Or you may copy and paste the following web link into your email browser.


*This course has been approved by the IRS Registered Preparer Office. The University of Minnesota College of Continuing Education is an Approved Continuing Education Provider.



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