—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