What is in this article?:
- Corn and Soybean Producers: Time to Start Planning Your Income Taxes
- Limit tax liability
Limit tax liability
Here is what producers can do before the end of the year to limit their tax liability:
- Prepay farm expenses. Feed, fertilizer, seed and similar expenses can be prepaid. Typically, discounts are received by paying for these expenses in the fall. Producers can deduct prepaid expenses that do not exceed 50% of their other deductible farm expenses.
- Pay real estate taxes or interest. Paying taxes or interest can be done before the end of the year to increase 2010 expenses.
- Defer income to 2011. Crop and livestock sales can be deferred until the next year by using a deferred payment contract. Most grain elevators or sales barns will defer sales until the next tax year. Producers should be aware that they are at risk if the business becomes insolvent before the check is received and cashed.
- Purchase machinery or equipment. Machinery or equipment purchases can be made before the end of the year to get a depreciation or 179 expense deduction in 2010.
Information on agricultural topics can be found in the Farmers Tax Guide, Publication 225. It can be obtained at any IRS office or can be ordered by calling 800-829-3676. Any questions about these topics should be addressed to your tax professional or the IRS at (800-829-1040). North Dakota income tax questions can be addressed to the North Dakota Tax Department (877-328-7088).