D2B—Lancaster Fanning, Saturday, March 22,1980
Here’re tips on handling
LANCASTER -
Depreciation and in
vestment tax credits aren’t
something a farmer can
work out when he purchases
a farm and then forget.
Both can save a farmer
many dollars in the ongoing
operation of his farm.
Items of equipment which
are purchased and put into
use or service before the en J
of a given tax year usually
qualify for depreciation and
investment tax credit.
Tangible personal
equipment which has a
useful life of at least seven
years—and most farm
equipment does—is eligible
for the full amount of in
vestment tax credit.
According to Certified
Public Accountant Steven M.
Hoffman, manager of the
Harrisburg office of Peat,
Marwick, Mitchell and
Company, that amount is 10
percent.
Investment tax credit is a
direct offset to a farmer’s
tax liability. So this can be a
significant feature in tax
planing as well as in pur
chasing equipment.
Ten percent of the cost of
the equipment can be
recovered shortly after the
purchase and initial use of
the machinery through the
investment tax credit’s
reduced payments.
The investment tax credit
also can be taken on tanpble
property other than a
building or structure when
that property is used for
farming activity.
The Revenue Act of 1978,
the latest major piece of tax
legislation, clarified what a
tangible piece of farm
property could be by in
cluding single-purpose
livestock or horticultural
facihties as eligible for the
investment tax credit,
Hoffman said.
So, a unitary hog, poultry,
cattle-raising, feeding
facility, or greenhouse is
now eligible for the in
vestment tax credit even
though they may or may not
have the characteristics of a
building.
It is important to know
that when Congress passed
that legislation its provisions
were made retroactive to
1975
If a farmer has one of
these structures, exclusively
used for agricultural or
horticultural purposes, he
can file an amended return
for those years that still are
open under the statute of
limitations and obtain an
investment tax credit
That could amount to a
significant number of
dollars, Hoffman said
Investment tax credit is
specifically adaptable to
farmers’ livestock as well as
structures
Livestock can qualify for
the investment tax credit if
the animal is used for dairy,
draft, breeding, or sporting
purposes
Fences, used in con
junction with raising
livestock, also can qualify
for the tax credit
Paved barnyards to keep
livestock out of the mud, or
to provide easy access for
tru< ics to load livestock, can
quahfv hf the investment
fa •> rcdit
depreciation, tax credit
“Most people would think
either of those cases would
represent a pretty fixed
cost,’’ he admitted. But it is
another area where a farmer
may be able to recover some
tax dollars.
Water wells, to provide
water for raising poultry and
livestock, also can qualify
for the investment tax
credit.
Storage facilities which
are used to store com
modities before they are
used, also qualify. If the
facilities are used in a far
ming activity, such as
raising livestock, they
qualify for purposes of the
investment tax credit
regardless whether they are
permanent or temporary
facilities, he said.
For example typical
storage facilities on a farm
which would qualify f nr
needed
OCEAN CITY, Md. -
Soybeans should continue to
be one of the United State’s
best sellers abroad in the
decade ahead. But it’s going
to take a vigorous marketing
effort to expand sales, a U.S.
Department of Agriculture
marketing specialist told a
gathering of over 1000 area
farmers at the recent
Delmarva Soybean Meeting
in Ocean city, Md.
Kelly Harrison, general
sales manager and associate
administrator for the
USDA’s Foreign
Agricultural Service said
soybeans are now the
nation’s number one export
crop, with overseas sales
totaling over seven and a
half billion dollars last year.
That’s nearly six times more
than in 1970.
But to hold its own in the
face of rising competition
from producers in BrazU and
Argentina over the next few
years, the U S. is going to
have to work harder than
ever to develop new markets
for its soybeans
Current U S soybean
supplies are at an all-time
high. In the absence of
corresponding growth in
domestic and foreign
demand, there’s likely to be
a significant buildup in
soybean stocks this year,
Harrison said.
“With larger carryout
stocks indicated, prices will
be under considerable
downward pressure,” he
warned “The projection
now is for the season
average price to producers
to fall in the range of $5 75 to
$6 50 a bushel ”
Last year the average was
$6 75
Domestic soybean crush is
expected to be slightly
higher than in 1978/79, but it
won't come anywhere near
using all the beans produced
In fact, more than half the
crop is exported each year
Without exports,”
Harrison told the audience of
soybean growers, you
would have had no outlet for
roughly 55 percent of your
crop last year "
investment tax credit in
clude gas storage tanks,
gram bins, com cnbs, and
silos.
Even though some seem to
be buddings, they should
qualify for investment tax
credit, he said.
There is a limit to the
amount of used property a
farmer can declare to claim
investment tax credit in any
one year.
That limit is $lOO,OOO.
If a farmer acquires more
than $lOO,OOO worth of
property in one year he can
only take $lO,OOO, or 10
percent, in investment tax
credit on that property.
Therefore, the timing of
purchase of used property
can be important.
If a farmer obtains
$200,000 worth of used
property in one year, the
maximum amount of m-
New overseas markets
for U.S. soybeans
Soybean exports are
currently projected at 815
million bushels for 1979/80.
This is nearly 10 percent
more than last season.
Lower U.S. prices combined
with further growth m meal
and oU demand overseas are
providing the impetus, he
explained. However, in
creased competition from
South American soybeans
and meal following their
March-May harvest will act
to slow U.S. export
movement in the last half of
1980.
Both Argentina and Brazil
are expecting big crops. As a
result, new-crop U.S. beans
are likely to face heavy
competition when they come
onto world markets next fall.
“Export demand will be a
crucial pnce-making factor
for soybeans in the 1980’5,”
predicted Harrison.
“Granted we anticipate
world demand for soybeans
will continue strong
throughout the decade.
However, charting the
course of growth in U.S
export sales in the 1980’s
may be more difficult than
during the 1970’5.
“Our more mature
markets in developed
countries seem to indicate a
slower growth trend. And
our sales success in
developed foreign markets
has led to increased com
petition from other soybean
exporters such as Brazil and
Argentina,” he said
Thus, he continued, to
maintain our foreign market
sales growth in the years
ahead, a larger share of our
exports must go to emerging
growth markets such as
Korea and Mexico
“We need to be prepared
to face and counter
increasingly heavy com
petition for all soybean
markets abroad,” Harrison
continued
Soybean exports don’t just
happen “It takes a Jot of
effort to develop the foreign
market demand, to educate
foreign processors and
consumers on how to ef
ficiently use soybeans and
vestment tax credit that can
be taken would be $lO,OOO.
But, Hoffman pointed out,
if the purchase could be
structured so that a portion
were acquired late in
December and the
remainder were acquired
the following year, the
farmer could, in effect,
double his tax break
although it would have to be
done over two years tune.
The relative advantages
and disadvantages may vary
from farm to farm and even
from year to year on a single
operation.
In any case, it is best to
check with a skilled farm tax
accountant or the IRS before
making depreciation or
investment tax credit
decisions which may be
questioned. CH
their products, to create the
international trade policy
circumstances which would
permit and encourage ex
port growth, and to provide
the mtemational market
intelligence to give these
efforts direction and scope.”
The rapid growth m U.S
agricultural export trade in
recent years has made this
trade crucial to the
agricultural community,
said Hamson.
“On a national average,
the harvest from almost one
third of our cropland is sold
to foreign countries every
year . . . overseas markets
permitted soybean
producers to double output
during the 1970’s with no
adverse price effect Output
in 1979 reached the 62-
million-ton level with a $l4
billion farm value
“Export demand will
continue to be a crucial
price-making factor for
soybeans in the 1980’s
particularly in the current
marketing year ” Vigorous
pursuit of foreign markets
continues to be crucial to
sales success, he concluded
See your nearest
HOLLAIND
Dealer for
Dependable Equipment and
Dependable Service:
Airville, PA
Airville Farm Service
Airville, PA
717-862-3358
Alexandria. PA
Efl “' Bmem KSTm lne
1?4-S«i5 717.789-3117
Lynnport, PA
Annville, PA
BHM Farm Equipment, Inc K ermit * s tler, Inc
P n , Lynnport, PA
717-867-2211 215-298-2011
Beavertown. PA
BenH Walter
Beavertown, PA
717-658-7024
Bemville. PA
Stanley A Klopp, Inc,
Bemville, PA
215-488-1510
Biglerville, PA
Nelson Farm Supply, Inc
Biglerville, PA
717-677-8144
Carlisle. PA
Paul Shovers, Inc
35 East Willow Street
717-243-2686
Catawissa, PA
Abraczmskas Farm
Equipment, Inc
RD. 1
717-356-2323
Chambersburg. PA
Clugston Implement, Inc
RD 1
717-263-4103
itman. PA
Marlin W Schreffler
Nevin N MyerS Sons, Inc on
Chester Springs. PA 717-548-1120
215-827-7414 Quarryville, PA
Chester Springs. PA
Davidsburg, PA C E Wiley & Son, Inc
George N Gross, Inc South Lime Street
R D 2, Dover. PA 717-786-2895
717-292-1673 Reedsville. PA
Elizabethtown, PA Big Valley Sales & Service,
MessickFarm
Equipment, Inc
Rt 283 -Rheem’s Exit 717-667-3944
717-367-1319 Ringtown, PA
_ „ . Ringtown Farm Equipment
Gettysburg. PA Rmgtown.PA
Ymglmg Implements 717-889-3184
RD9 01 ,
717-359-4848 Silverciale, PA
Halifax. PA
Sweigard Bros
R D 3, Box 13
717-896 3414
Hanover, PA
Sheets Bros, Inc
Carlisle Street
717 632-3660
Honey Brook. PA
Dependable Motor Co
East Mam Street
215-273 3131
215 273-3737
Honey Grove. PA
Norman D Clark & Son, Inc Walter G Coale, Inc
Honey Grove, PA
717-734 3682
HughesviHe, PA
Farnsworth Farm Ag Ind Equipment Co Inc
Supplies, Inc R D 2, Route 273 East
103 Cemetery Street 301-398 6132
717 584 2106 301-658 5568
Woodstown, NJ
Lancaster, PA J tt
■p— ———— Owen Supply Co
irjl ® rubaker ' lnc Broad Street & East Avenue
350 Strasburg Pike 609 769 0308
717 397 5179
Lebanon, PA
Evergreen Tractor Co , Inc
30 Evergreen Road
717 272 4641
Lititz. PA
Roy A Brubaker
700 Woodcrest Avenue
717-626-7766
Loysville, PA
McEwensville. PA
Don’s Service Shop
Box 97
717-538-1362
Mill Hall. PA
Paul A. Dotterer
RD 1
717-726-3471
lew Holland. PA
ABC Groff, Inc
110 South Railroad
717-354-4191
Oley, PA
A J Noss&Son, Inc
RD2
215-987-6257
Orwigsburg, PA
PaulJ Eichert&Son
RD 1
717-943-2304
Palm. PA
Wentz Farm Supplies, Inc
Rt 29
215-679-7164
I G Sales
Box 149
215 257 5135
Tamaqua, PA
Charles S Snyder, Inc
RD 3
717-386-5945
West Chester, PA
MS Vearsley&Son
114-116 East Market Street
215 696 2990
West Grove. PA
SG Lewis & Son, Inc
R D 2, Box 66
215-869 2214
Churchville, MD
2849 53 Churchville Rd
301 734 7722
Rising Sun, MD