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February 16, 2014
Land Leasing
Forms
negotiate an acceptable price for the machine and
the … the difference between the price of
the new model and the … is based
on the original price minus a fixed rate for each …
June 10, 2013
Risk Management Strategies
enters a year(s) with low farm prices? Farmers will have to
pay …
July 18, 2012
Risk Management Strategies
addition, “high” corn prices will likely cause reduced …
October 15, 2018
KFMA Newsletters
The Tax Cuts and Jobs Act (TCJA) was passed in December of 2017 and took effect as of January 1, 2018, with some
changes being retroactive to 2017. Although there are many changes, this article will focus on the depreciation changes
and how farm businesses will be affected.
Under the prior tax law, the depreciable recovery period was 7 years for both new and used machinery and/or
equipment. Now, under the TCJA, the recovery period is 5 years for new equipment and 7 years for used equipment.
This 5‐year recovery period goes into effect for any equipment purchased after December 31, 2017 for original use.
Along with this change, the 150‐percent declining balance method is no longer required for farm machinery and
equipment. The default method for farm machinery is now 200‐percent declining balance, with only 15 and 20‐year life
property maintaining the 150‐percent declining balance as the standard method.
Under the old law, the expense method depreciation (commonly referred to as Section 179 expense) deduction limit
was $510,000 on up to $2,030,000 of purchases. Under the TCJA, the Section 179 deduction limit is $1,000,000,
applicable on up to $2,500,000 of purchases. Using Section 179 is a taxpayer election. Section 179 allows for more
flexibility in reaching a desired taxable income if a farmer elects out of bonus depreciation.
http://www.agmanager.info/kfma/ September 2018 E‐newsletter 6
The TCJA allows for 100% special (Bonus) depreciation for new or used property and farm buildings. Prior to this, the
bonus depreciation election was 50% in 2017 and was set to decrease each following year until phased out. This change
took effect for any property acquired and placed in service after September 27, 2017. The new 100% bonus will be
applicable on equipment placed in service after December 31, 2017, and it will begin to phase out starting on equipment
placed in service in 2023. The same bonus election must be made for all items of the same class (i.e. 5‐year or 7‐year
property) purchased within the same tax year. Under the TCJA, if both new and used equipment are purchased in a tax
year, they will now be in separate classes, allowing for separate bonus elections to be available.
Like‐kind exchanges will be treated very differently under the TCJA. Under the old tax law, only the trade difference was
accounted for when exchanging (trading) machinery. Under the TCJA, the machine that is traded in will now be treated
as a sale for income tax purposes, creating income to be shown. The full purchase cost of the new machine is now
available for depreciation expense.
Example:
Farmer Joe (a single farmer) trades an old piece of machinery for a new piece of machinery worth $250,000. The
dealership gives Joe a trade allowance of $100,000 for the old piece of machinery, leaving a trade difference of
$150,000. Net farm income before depreciation is $100,000. The table below shows some of the differences under the
new tax law as compared to the prior law.
Prior Law TCJA
Price of New Equipment $250,000 …
February 1, 2015
Food Safety
largely receive the same price whether or not the vaccine … sufficiently higher fed cattle prices to offset feedlot adoption … sufficiently higher fed cattle
prices to cover feedlot adoption …
Dairy Program Resources
Figure 1 shows the All Milk Price, the MPP Feed Cost, and the … fluctuations in All Milk price tend to drive the margin … in reality the All Milk
Price drove the actual margin much …
September 11, 2013
Improving pastures (nationally), lower forage
prices + higher calf prices…
• Are “current improvements” sufficient to trigger
expansion?
– … hd)
TREND: HEIFER RETENTION MOVING
NORTHWEST WITHIN NATIONAL BEEF
COW HERD
Longer‐term projections (as of Feb. 2013)
http://www.usda.gov/oce/commodity/projections/index.htm
2021 Projection 1.1
million less than Feb.
12’
2022 herd +12%
(vs. 2012)
16
As of: 9/10/13’
http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/default.asp
Sep FC:
9/10: $156 …
August 14, 2012
Heterogeneous impacts abound
– Price & Tax implications must be …
February 29, 2008
manure storage/mngtmngt
Price impactsPrice impacts:
Most negative … or 1or 1--2 miles reduces prices by 4.75% and 0.56% 2 miles … and 0.56% 2 miles reduces prices by 4.75% and 0.56%
…
December 1, 2016
KFMA Research
that a run-up in commodity prices and
land values in 2008 … is how long will commodity prices remain at the current levels … the outlook for commodity prices remains pessimistic in the …