—Lancaster Farming. Saturday. October 25. '1969 6 Tax Management Important To Farm Success The ability to manage is more important in determining a farm er's success than the size of his farm, the quality of his land or his particular enterprise. That’s the opinion of W. T. McAllister, extension farm management specialist at the University of Delaware. . He feels the real difference be tween the successful and mar ginal businessman farmer or storekeeper is his ability to manage all available resources. One of the farmer's big prob lems. as McAllister sees it, is that he is constan.lv under so much pressuie to get the job done that he doesn't take time to oigamze his work and follow through on details. An area that is often oierlooked until it is too late is tax management. Tvpically a farmer rushes through the plow-plant-cultivate and hanest period with little thought of taxes Receipts are studied in a drawer for a cold January day when the filing date is just around the corner and theie is little chance to make any farm management decisions. But there are decisions that can be made now that can affect a farmer's ’69 tax return. McAllister lists the following items that decrease taxable in come and require management decisions before December 31: Pay up operating accounts and unpaid bills; Buy and pay for some of next year's supplies; (be sure tax sav-i ing is greater than cost of ad-| vance purchases): | Buy things that last longer than one year but are not capital items paint, small tools, build ing and machine repairs; | Delay selling cash items until] aftei January Ist, but compare] the tax saving with possible price declines. These include crops, livestock, timber and capital items with large capital gains. Farmers can save tax dollars, according to the specialist, by paying their children reasonable ■wages for the farm work they do. This has to be an “arms length” transfer of payment in cash or in kind between parents and chikhen. The investment credit farm ers are allowed when they buy machinery can also be a tax sav er. McAllister says each .dollar of lak credit is a dollar of tax farm ers don’t have to pay. Investment credit is applicable to equipment having a useful life ol at least four years It amounts to seven percent o! the investment if the life of the in vestment is eight years or more; ot this amount if life is six yeais. i*l four >eavs and is de ducted liom the toal income tax due on the return. imestment credit can be a source ci ticubic This happens, accoidmg to McAllists', when equipment on which the faimei claimed imestment ciedit in a pi loi year is not kept for the length oi lime used in comput ing the ciedu. Don’t Leave Loaded Guns Unattended If you lean the gun against a tree. car. or fence while you eat lunch or lest, it is possible that the wind may dislodge it, your dog or companion might bump it and cause it to the Remem bei. hunting safety is the ic sponsibdity of each individual Ininlct. reminds Robert G. Win gaid Extension wiid'ue specia list at The Pemivvivania State Un.\ ei Mty V. e kno'’i u hat h pnened to th ~;,E who u- £, n to 't'*al gal’- d >n t,-5 oi IJ:,i ..’.ceil. 'the;. mu up to be com. .u.ii!<n 1 h- An example would be a tractor tractor. This is done, by adding purchased in 1965 for $5,000. the undepreciated value of the The farmer expected to keep the machine traded to the amount of tractor for six years and claimed additional money invested. As two-thirds of the investment ere- sume the remaining-vahie ot the dit allowed. This would be % of original tractor was The ($5,000 x .07) or $235. However, basis for determining investment the tvactor was not large enough, credit on the new tractor would so in-1969, the farmer traded it be $4,500 plus $1,667. or. $6,167. for a larger one investing an If the f armer ' determined, that additional $4,500. the life of this'new .tractor would The problem is doubly compli- he s * x ais ’ he could two ,eated, because having owned the thirds of the full s ®7® n P tractor for four years, the farm- investment cl ' edlt al^ a er qualifies for only one-third of reports this mvestment credit of the investment credit, not the °n foim 346 two-thirds claimed. Therefore, the tax credit to 13 one-half of the investment credit. 10 40 - 0” $ll7 50, must be paid back as 1969 was a pretty good year tax on the 1969 report. for most farmers. But some may hfve had small incomes and it The second problem is to de- tray be to their advantage tt termine the basis for figuring boost ’69 incomes. Here are ways investment credit on the new . Sell livestock and ciops, BIG DUTCHMAN DiHer Ave., New Holland, Pa. Ip* - 4 COMPLETELY AUTOMATED DOUBLE DECK CAGE SYSTEM COMBINES LATEST DESIGN FEATURES WITH PROVEN DEPENDABILITY FOR REDUCED LABOR AND INCREASED PRODUCTION A Division of U.S. Industries. Inc -Postpone bill payment past January Ist; , Boost miscellaneous income by "selling wood, working off the farm or doing custom work. - - McAllister gives -these cau tions to farmers who do attempt end-of-the-year tax management: It is never good business to re port anything but the truth on an 'income tax return. An adjustment to minimize taxes can result in an unprofit able decision for the business. Attempts to minimize taxes in the current year may mean larg er taxes in future years. Personal deductions and - ex emptions not claimed each year are automatically lost. " rO' „ * Cleanliness, wholesoxneness, proper fat content and inclusion of poultry under proper circum stances 'will be easier to enforce as the number of federally in spected plants increase. ' ; r Between. September 1, 1968 to August 31. 1969, cattle slaughter under federal-inspection increas ed from 85.8 to 87.6 -percent; calves from' 70.4 to 72,5 percent; hogs from 88.4 to 90.8 percent; and sheep and lambs frdm'9l.9 1 to 93.7 percent. With the implex mentation of - the .Wholesome Meat Act-in December : 19e7-,' all remaining slaughter will soon be inspected by state inspection pro grams which must be* certified as “at least .equal .to” federal stan dards. The deadline for conxpli. ance with the Wholesome Meat Act is less than three months away. Phone 354-5168
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