Last month, we discussed planning tips for your personal income taxes. When preparing for the end of the year, there are also a few things to keep in mind that may impact your agriculture business.
Some ag businesses may be taking advantage of the Section 179 deduction, which allows businesses to write off the cost of newly acquired equipment or other certain types of company property in the year that is was purchased. In 2013, if you spent up to $2 million on qualifying equipment, the deduction limit was $500,000. This year, the limit was drastically reduced to $25,000. There is a chance that Congress may decide to extend the $500,000 limit into 2014 and 2015, but a decision has not yet been reached. If you are planning on purchasing new equipment for your agriculture business to be used in 2015, you may want to hold off until the New Year if you have already met the thresholds under Section 179.
Your business may also be eligible to claim a credit on your income tax return for the federal excise tax on certain fuels. To claim the credit, taxes must have been paid on the fuel and it must have been used for “farming purposes,” such as cultivating soil or land, raising livestock or operating or maintaining your farm and its equipment. Various types of fuel qualify for the credit, including gasoline, aviation gasoline, undyed diesel fuel, kerosene, and other alternative fuels.
If you suffered losses in 2014 and are due to receive crop insurance payments, you may be able to defer the payments if the affected crops would typically be sold in the following year. Additionally, depending on when you file a crop insurance claim for 2014, you may not receive payment until 2015 and will not have to report the payments as income until then.
For more tips and to determine whether you are eligible for any of the above credits or deductions, it is best to consult your trusted CPA.
column by STEVEN E. CRISMAN
BIO: Steven Crisman is the managing partner of Cross, Fernandez & Riley, LLP’s (C/F/R) Winter Haven office and leads their Agriculture Practice Group. He primarily serves the agriculture, manufacturing, warehousing, and distribution industries. He has specific experience with citrus growers, cattle ranchers, citrus and other horticultural nurseries, citrus harvesters and other support industries as well as watermelon, blueberry and other growers. In addition, Steve provides comprehensive tax and estate planning, attestation and business succession planning services.