—Lancaster Farming, Saturday, December 10,1977 122 December management planning time DOVER Del. - Income tax time is rolling around again and farmers who intend to do some tax planning had better get down to the job soon. They shouldn’t wait until their tax forms arrive and all changes in tax laws are known. It will be too late then to make any ad justments to 1977 taxable income, points out University of Delaware Extension economist, W.T. McAllister. There are few changes in the Tax Reduction and Sim plification Act of 1977 that affect farmers directly. Red meat up HARRISBURG - Red meat production in Pennsylvania during October 1977 totaled 95.3 million pounds, up five per cent from a year earlier according to the Penn sylvania Crop Reporting Service. Cattle slaughter at 95,300 head was up 10 per cent from October 1976. Calf slaughter, at 33,800 he.ad was down 17 per cent, hog slaughter at 244,700 head was down six per cent, and sheep and Drainage Pays High Returns Typical Investment Annual Return Land Drainage 2146% (d) Farm Buildings 3-23% (d) Farm Land 11% (e) Stocks 7.4% <f) Bonds 6.1% (g) COMPARE Even with the conservative figures shown above, it’s obvious that land drainage should top farmers’ lists of investment priorities. COCALICO EQUIPMENT CO. BfflT DRAINAGE & EXCAVATING \u CA/ RD#3 DENVER, PA. 17517 \ / (215)267-3808 Farmers have a number of tax management The economist suggests they consider these now, while there is still tune to take certain steps which may affect their taxable income for the year. Investment credit is one of the options to consider. This will continue at the 10 per cent level for 1977 taxes and for 1978, unless changed by a new tax law next year. This means that one doesn’t need to purchase capital items .that qualify for investment credit before December 31, just to get the full 10 per lambs slaughter at 11,200 head were down three per cent from October 1976. Nationally, commercial red meat production during October 1977 totaled 3.3 billion poimds, down four per cent from a year earlier. Cattle slaughter was down three per cent, calf slaughter was down one per cent, hog slaughter was down six per cent, and sheep and lambs slaughter were down five per cent from October 1976. is farmer tax cent. Any purchases of this nature should be based on need and profit justification, and whether the credit is likely to be worth more this year or next. One must claim the credit in the year in which the purchase is made, explains McAllister. But unused credit can be carried back three or forward seven years. On the subject of taxable income levels, the economist also has some advice. One should estimate his level of taxable income for 1977 and compare this with prior years and expectations for 1977. Depending on whether this year’s income is unusually high or low, a person may want to make some shifts. If the taxable income is unusually large, one should pay all current bills by December 31, even if borrowing funds is necessary. Buying ?h*»nd is another adjustment to consider during a high income year. To do this, one contracts and Pov micro 25-^ Deluxe Dcluxa 12" sprt and chro Vinyl coi ADAMS CO. REEDY BROS. COMPANY ofi 0 fi S 7 S J OLT f£ US H RD 4 Gettysburg, PA ad 717-334-3710 Kmzers, PA WEBER’S HARDWARE 100 W Mam St Mechamcsburg, PA 717-766-3451 LANCASTER CO. ANDREW BEILER 196 Eastbrook Rd Smoketown, PA FISHER'S LAWN & GARDEN CENTER Rt 896,4 mi So of Strasburg, PA 717-687-8566 C. H. LAUSCH Ephrata, PA 717-733-3749 LAWN CARE OF PENNA, Martmdale, PA 215-445-6650 LONG'S MOWER SERVICE 4 SALES Lititz, PA 717-626-8180 OBERHOLTZER'S Lititz PA 717-733 8506 5 Factory suggested list price pays for a specified amount of necessary supplies before December 31, being very sure that the is final and not jnk a deposit against future needs. A person should be ready to show a price break, a hedge against possible short supply or same other economic incentive for his purchase The basic rule of the In ternal Revenue Service is that there must be a valid business reason for making advance purchases. And buying ahead just to reduce income taxes is not a valid reason, points out McAllister. Reasons that are valid include: (1) has been a common practice over past years; (2) to assure a stock of critical production sup plies; (3) to get a lower price; (4) , other good business reasons. Should preliminary check indicate that taxable income will be abnormally low this year, one may wish to defer certain expenses until after the first of the year. A person R.P. WILLIAMS & SONS, INC Columbia, PA 717-684-2019 PERRY CO. CONRAD’S MOWER & SAW SERVICE Fox Hollow Rd RDI, Box 534 Shermans Dale, PA 717-582-4437 YORK CO. MAUSSSHARPENING SERVICE 524 N Pershing Ave York, PA 717-843-1716 SHEETS BROS., INC. 1061 Carlisle St Hanover, PA 17331 717-632-3660 STRICKLERS HOME & GARDEN Red Lion, PA 717-244-8187 WEHLER’S LAWN MOWER 3655 Admire Road Dover, PA 717-292-3418 may also wish to advance certain sales and calculate depreciation on a straight line basis. The goal of tax management is to even out the peaks and valleys of farm income, explains the economist. Another method of handling wide swings in year-to-vear income is through income averaging, using Tax Schedule G. Whatever one does, the first step is to calculate estimated taxable income. A person shouldn’t be misled by the fact that he feels poor or flush, but use your records to determine the real facts. ' “Soil Testing” “Personal Recommendation” “Precise Application” “Crop Evaluation” CHEMGRO FERTILIZER CO., INC STATE ST.. BOX 218 East Petersburg, Pa. 17520 PHONE; 717-569-3296 The economist - has prepared a helpful fact sheet on these and other tax management alternatives. For a free copy of “Tax Management by Farmers 1977 Tax Year,” contact the'- county Extension office in Newark, Dover or Georgetown. The publication is also available by writing: MAILROOM, Agricultural Hall, University of Delaware, Newark, 19711. For those farmers who prepare their own income tax report, a booklet “Farmers Tax Guide” is also available at the county Extension offices. % $ s § I 1 li
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