—Lancaster Farming, Saturday. September 17,1977 98 Trade of property eliminates tax By JERRY WEBB University of Delaware NEWARK, Del. - In the early days of American agriculture, a farmer who felt hemmed in by too many neighbors could just load up and move west. Plenty of land was available for the taking. That option has long smce disappeared, but there is still a fairly painless way to escape some urban pressures. That is to simply trade farms. If handled properly, a trade can be done tax free. Some time ago I visited one of those traded farms - a fairly large farm near Section 1031 of the tax law Chestertown, Maryland, says property held for where a new swine operation productive use in a had been set up. I was told business or for investment that the owner had traded property of “like-kind” one small farm in the which is also to be used the Baltimore-Washington me- same way. As long as the Auction set LEBANON - A disaster The sale will offer crafts, relief auction will be held at the Lebanon Fairgrounds, antl( » ues * furmture >. com- September 17, sponsored by forters and quilts, paintings the Northeast District toys, and homemade food. Churches of the Brethren. The money raised through The sale will begin at 10 the sale will be used to help a.m., with breakfast being victims of the Johnstown served from 7 a.m. on. flood disaster area. galopolis for three farms in the land of pleasant living. It sounded like an ex cellent trade to this old country boy who grew up in a community where trading horses was common. I once traded 20 bushels of oats for a pretty good old horse and didn’t have any tax problems, but I wondered about trading something as large as a farm. It’s perfectly legal in the eyes of the Internal Revenue Service - a farmer can swap one farm for another without the tax burden that goes along with selling a farm. trade involves property of “like-kind”, there is no accounting of any gain or loss and virtually no taxes due. So the Delmarva farmer mentioned above was able to trade a small farm in the midst of suburbia - one that was quite valuable to a developer - for a much larger spread in a more desirable agricultural area. How was this ac complished? I don’t really know the fine details, but m general it went like this: The farmer was approached by an investor who wanted to buy the place. Knowing the tax pitfalls involved in outright selling, the farmer suggested a trade - for land of equal value in an area where he wouldn’t mind moving. It then became the buyer’s problem to assemble the farms acceptable to the farmer. These were pur chased by the investor and traded even up for the one farm in suburbia. The exchange met the test of “hke-kind”, so the farmer had no tax burden. He also avoided the problem of selling a farm and then trying to find another one in 1977 PENN FALLNATIONALS DQMX FRIDAY -SEPIHBBI23 -7.-00 PX SATUMtV - SEPTEMBER 24 - 1M PJL (Ramdate - September 24-1:00 P.M.) (Raindate - September 25 - 2:00 P.M.) 12.000 SUPER STOCK 7,000 SUPER STOCK 5.000 SUPER STOCK 7,000 MODIFIED 5.000 MODIFIED 9,000 SUPER STOCK 12.000 UNLIMITED 9,000 MODIFIED ORDER_ EARLY for best seats tickets also available at the gate PULLS EVERY SATURDAY NIGHT 7:00 P.M. REGULAR ADMISSION pho|)e . Write: Adults $3.50 ofiirA /7i 7\ ccq qoqc Buck Tractor Pulls 6to 12 yrs. $1.50 laTl l lo Box 218, East Petersburg 5 and under FREE Track (717) 284 ‘ 2139 Pennsylvania 17520 the short period allowed by the capital gains law. He Ifet the investor do the work. After all, it was the investor who wanted the suburban farm so it was only fair that he arrange the swap. There are many variations on this farm swap idea with many opportunities for farmers to get much larger acreages, away from crowded, complaining urban neighborhoods. Swapping isn’t limited to land. The law just says property - that includes machinery, livestock, fence posts, and many other things. It must be business connected, however. It might be tough to explain the swap of a saddle horse for a snow mobile. The “like-kind definition is pretty broad and covers a lot of possibilities. There seems to be no problem trading a hog farm for cropland or a vegetable farm for a beef farm. The courts have said it’s even o.k. to trade a farm for an apartment house. Maybe the farm swap offers a retiring farmer a way to divide his holdings. First, trade for as many parcels as needed, then in BUCK TRACTOR PULLS 10 MILES SOUTH OF UNCASTER ON RT. 272 SEPTEMBER 23-24. 1977 FEATURING A *18,000.00 PURSE ALL THE TOP TRACTORS IN '^Ppo THE U.S. COMPETING. VSSSJI- now-4 BIG CLASSES EACH NITEUi SEE YOU AT THE BUCK! an orderly fashion transfer Here’s a case where good these as complete units to legal advice is needed. And the apparent heirs. That no doubt where farmers might be much more need a lot more information palatable than selling the than can be presented here, home place and dividing the But maybe this will start money. some of them thinking. New Location For The ORGANIC CENTER (now) 217 South Railroad Ave (former R.R. station) New Holland, PA 17557. Phone 717354-7064. Open Monday, Wednesday, Thursday 8:30 to 4:00, Tuesday and Friday by appointment. Our Naturmin M 42 G minerals out of a mine deposit are doing so goodwe get them by the car load, and need the railroad siding. Besides getting famous for all kinds of livestock, they are excellent to supply missing elements in the soil for larger healthier crops with less fertilizer. Releases nutrients in the soil. Loosens the ground, and resulting crops are healthier and better for livestock. Takes less feed. Apply on pasture and hay fields also. Use it in the fall for best results next year. CLEAN ALFALFA WITHOUT SPRAYING plus high yields in the history of our soil conditioners and seed treatments for several years, with very little or no fertilizer except manure. Same for com and grain. Get started to condition the soil, Fall is best. Dealers are wanted in other areas. A BETTER GRAIN - Triticale, a cross between wheat and rye is higher protein for feeding and silage. Very vigorous and tall. Made over 60 bu. per acre using only our seed treatments. Seed for sale $6.00 bushel.
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