* t
Changes
The U.S. Department of
Agriculture has announced
major changes in its Farm
Storage and Drying Equipment
Loan Program which reflect a
lessening of need for on-farm
grain storage space.
The changes, effective
December 13, are:
—Storage needs will be based
on one year’s production of
eligible commodities instead of
the present two years.
—Loans will no longer be
available for oxgen-limiting and
other silo-type structures or for
equipment for use with such
structures.
—Costs of materials and labor
for concrete work or electrical
wiring cannot be included in
loans.
—The maximum loan or
aggregate outstanding balance is
reduced from $35,000 to $25,000.
—The interest rate is increased
on loans from 46 cents Cap-
WISCONSIN
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\ WAM ENGINES -ROM 4to 65 HP.
\ W / ALLIS CHALMERS & BRIGGS &
stratton engines
ENGINE and MAGNETO SERVICE
AMOS I. FISHER
R.D.No.IBoxIOB Bird inHand,.Pa. 17505
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corporotio
In Form Facility Loan Program
proximately five and one-half
percent annually) per $lOO or
fraction thereof to 50 cents (six
percent annually) per $lOO or
fraction thereof. This new rate
reflects increased borrowing
costs of money to Commodity
Credit Corporation
USDA said the need for farm
storage space has eased due to
the record pace of construction of
on-farm facilities during the past
several years and because of the
recent rapid increase in wheat
and feed grain exports.
The changes are designed to
maintain program activity at a
level which will more closely
reflect the current storage
situation rather than the situation
that has prevailed over the past
several years, the Department
explained. They should result in a
reduction of federal government
expenditures in fiscal year 1974,
USDA officials added.
“The Department recognizes
Lancaster Farming. Saturday, December 23,1972
the value of having adequate on
farm storage and drying
capacity,” said Kenneth E.
Frick, Administrator of USDA’s
Agricultural Stabilization and
Conservation Service, which
administers the program. “On
farm facilities are an important
compliment to the concept of
market-oriented commodity
programs. However, the record
pace of construction of on-farm
facilities for the past several
years plus the rapid increase in
wheat and feed grain exports
warrant some adjustment in
program activity.”
“The farm facility loan
program has assisted many
farmers in obtaining on-farm
storage and drying facilities,”
Mr. Frick said. “Since the
beginning of the program
Flood Loan Money
May Be Taxable
Many farmers have received
disaster loans from Farmer’s
Home Administration and the
Small Business Administration
during the past several months.
The first $5,000 of these loans
does not have to be paid back.
However, many farmers are
wondering if this money is
taxable, according to associate
Lancaster County agent Jay W.
Irwin.
There are three situations
relative to the tax status that
need to be considered, Irwin
explains
If the money was used to
replace lost crops, feed or sup
plies, it must be reported as In
come. Therefore it will be taxed.
However, the expenses incurred
in purchasing feed or supplies
will be deductible expenses, so
the net effect on taxes will be
zero.
If a person does not spend the
$5,000 before the first of the year,
there will be taxes due on the
money. To avoid taxation, all
necessary feed and supplies
should be purchased before
January 1, 1973.
The second situation involves
replacement of personal items
lost in the flood. These include
such things as furniture, clothing,
or other household items. The
money received for replacement
of these items is not taxable.
However, casualty loss for tax
purposes on personal items will
be reduced by the amount of
money spend for replacement.
So if you lost $7,000 worth of
TELL US NOW... before any of your equipment gives out
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anticipate trouble, let us know. We’ll have the right replace
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help us to serve you better.
Nissley Farm Service
Washington Boro, Pa
a L. H. Brubaker
Lancaster, Pa.
through the end of fiscal year
1972, approximately $640.9
million have been loaned to
farmers through 356,650 loans;
these loans included farm
storage structures with storage
capicity of almost 18 billion
bushels.”
“Fifty-seven percent of the
total funds loaned and more than
49 percent of the total storage
capacity built under the program
have occurred since 1967. During
fiscal year 1972, producers
borrowed a record $120.3 million
through 38,950 loans for storage
structures and drying facilities
with a storage capacity of ap
proximately 251.2 million
bushels.”
“Activity during the current
fiscal year is expected to exceed
the record 1972 level.”
personal items and received
$5,000 to replace them, there will
only be a $2,000 casualty writeoff
for tax purpose, minus the $lOO
standard deduction against all
casualty losses
The third situation involves
expenditures of loan money to
replace depreciable capital
items The depreciable base of
new property will be reduced by
the loan money that does not have
to be paid back. For example,
you lost a tractor with a $2,000
undepreciated value and pur
chased a new one for $B,OOO The
cost basis of the tractor for
depreciation will be $lO,OOO, less
the ss,oooloan to be “forgiven” or
a total of $5,000, It would also be
possible to write the $2,000 off as
a casualty loss and depreciate
$3,000 on the new tractor
In the event you used the $5,000
loan money for something other
than capital expenditures, you
can add the undepreciated value
of lost items to the cash paid for
new items to determine the cost
basis. Another alternative m this
case would be to take a casualty
loss on lost items and depreciate
the cash paid for the new items.
wmmrev&ytfME
acallll
Roy H. Buck, he.
Ephrata, R.D. 2
Gnmelli Farm Service
Quarryville, Pa.
BHM Farm Equipment, he.
Annville, R.D. 1, Pa
17