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Taxation: List of Articles

Some Farm Families are Underpaying Their Self-Employment Tax
Gary J. Hoff
ALTB_08-01, January 2008
 

Abstract

If both husband and wife are receiving USDA farm program payments they may be underpaying their self-employment tax. Except for crop share landlords, a participant must actively participate in the farming operation to qualify for payments. This means each person also is liable for self-employment tax on the profits created by the farming operation.
 
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Self Employment Tax Treatment of CRP Payments
Gary J. Hoff
ALTB_07-08, November 2007
 

Abstract

As the end of 2007 nears, farmers may be able to save thousands of dollars of federal income tax or self employment tax with adequate planning. In this article Gary Hoff describes some of the possible areas for tax saving.
 
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Yearend Farm Tax Planning Considerations
Gary J. Hoff
ALTB_07-07, November 2007
 

Abstract

As the end of 2007 nears, farmers may be able to save thousands of dollars of federal income tax or self employment tax with adequate planning. In this article Gary Hoff describes some of the possible areas for tax saving.
 
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Conservation Easements: Act Quickly to Take Advantage of 2006 Tax Law
Paul Queck and Gary J. Hoff
ALTB_07-06, August 2007
 

Abstract

Farmers and ranchers can protect their land from urban sprawl and qualify for an enhanced federal tax deduction. However, they must act quickly as the federal law granting the enhanced deduction is set to expire December 31, 2007.
 
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Tax Reporting of Alcohol Credit Pass-Through from Cooperative
Gary Hoff
ALTB_07-02, February 2007
 

Abstract

Investors in limited liability companies and members of cooperatives with ethanol plants may receive various tax forms reporting income and losses, and credits. This article describes the tax consequences of the ethanol-related income, losses, and credits reported to investors and co-op members.
 
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Tax Reporting of Crop Insurance Payments
Gary Hoff
ALTB_05-01, September 2005
 

Abstract

Congress recognized the unpredictability of the weather and its effect on farm income many years ago. Consequently, it developed crop insurance programs and special federal income tax provisions to help farmers survive financially in times of drought and flooding.
 
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Charitable Contributions of Commodities
Gary Hoff
ALTB_04-08, March 2004
 

Abstract

For some farmers, making a charitable contribution in kind, rather than cash can increase the tax benefit of the gift. The tax consequences of the gift differs depending on whether the donor is an active farmer or a landlord.
 
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Self Employment Tax on Rented Farmland
Gary Hoff
ALTB_04-07, March 2004
 

Abstract

IRS has challenged taxpayers regarding whether rental payments for land paid to an owner who materially participates in farming the rented land is liable for self employment (SE) tax. The Courts have agreed with IRS in a number of cases. However, the Eight Circuit overruled the IRS on appeal. Relying on this successful appeal, taxpayers who did not recognize SE tax liability had an argument to avoid a negligence penalty. In 2003, IRS issued an official non-acquiescence statement regarding the appeal, making the possibility of penalties more probable for both taxpayers and tax professionals.
 
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Self Employment Tax on CRP Payments
Gary Hoff
ALTB_04-06, March 2004
 

Abstract

On June 23, 2003, IRS released a Chief Counsel’s letter ruling on the taxability of CRP payments for self-employment tax purposes. The ruling changes the way many taxpayers will handle these payments.
 
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Agricultural Labor Taxation
Gary Hoff
ALTB_04-05, March 2004
 

Abstract

Some laws regarding payroll taxes for agricultural labor are different than those for other types of businesses. The following will explain these differences so a farmer can report his farm labor correctly. This article covers major differences but is not intended to be complete or to cover state law.
 
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Taxation of Commodity Credit Loans
Gary Hoff
ALTB_04-04, March 2004
 

Abstract

In early 2002, the IRS issued a Revenue Procedure that allows a change in reporting methods from treating CCC loans as income to reporting CCC loans as loans. Rev. Proc. 2002-9, I.R.B. 2002-3. Under the procedure, a taxpayer who has been reporting CCC loans as loans may shift at any time to reporting CCC loans as income.

Effective for taxable years ending on or after December 31, 2001, a taxpayer reporting CCC loans as income can switch automatically to treating CCC loans as loans. For the year of change, all loans that year are reported as loans.

Loans taken out previously continue to be treated as if the election to report loans as income is still in effect. As the 2002 guidance states, the change is made on a “cut-off” basis.

The change can be very helpful for those wishing to revert back to treating CCC loans as loans late in the taxable year.

 
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Combing the 30%/50% Special Depreciation Allowance with the IRC §179 Expensing Allowance
Gary Hoff
ALTB_04-03, March 2004
 

Abstract

For taxpayers who make qualifying purchases, it is possible to use both the §179 expensing deduction and the special depreciation allowance (SDA). This article discusses some limitations and shows examples of how this can maximize tax depreciation, with a special focus on agricultural applications.
 
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New 50% Special Depreciation Allowance
Gary Hoff
ALTB_04-02, March 2004
 

Abstract

When Congress enacted the Job Creation and Worker Assistance Act of 2002 (JCWAA), they made one of the largest changes to the depreciation rules since 1986. This change allowed taxpayers who purchased qualified, first-use assets to deduct 30% of their cost in the first year. As a part of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), Congress made an even larger change to the depreciation rules. JGTRRA allows taxpayers to claim a first year deduction of 50% of the cost of qualified assets. The basic rules governing the 30%/50% deduction are discussed in this article using primarily agricultural examples.
 
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Internal Revenue Code §179 Expensing
Gary Hoff
ALTB_04-01, March 2004
 

Abstract

Taxpayers who have a farm or business have been allowed to claim a first year tax deduction up to $24,000 on qualifying purchases, e.g., of machinery and equipment. This deduction reduces the basis in the asset for purposes of regular depreciation. The Jobs and Growth Tax Relief Reconciliation Act of 2003 increased this deduction to $100,000 for tax years 2003 - 2005. The deductions will be reduced to $25,000 in 2006. The rules governing §179 are discussed in this article, using primarily agricultural examples.
 
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