The time-honored and respected undertaking of running a farm comes with an abundance of worries. Volatile weather along with volatile market conditions create uncertainty for owners and operators of farms. With proper research and planning, tax liability should not be another uncertainty burdening farmers. In addition to other areas of consideration, a Strategic Tax Plan developed for a farm owner/operator would also include these considerations:
- Opportunities arising from long-term contracts
- Domestic production activities deduction study
- Export incentives
- Tax credit analysis
- Hobby loss rules
- Independent contractor classifications relating to people working on the farm
- Depreciation methodology for structures and equipment
- Accounting methods for commodities, including livestock
Farmers also deal with unique estate planning considerations. Predominately holding their wealth in the form of valuable and coveted ‘dirt’, developing a plan for succession of the farm and their other wealth can be onerous. Popular sections for farmers of the Strategic Tax Plan often include estate and succession planning. However, the TAVAS team conducts a thorough examination during the planning process to minimize all taxes and protect valuable farm assets.