A3B—Lancaster Fanning, Saturday, March 29,1980 Why Jessie-type partnerships make a lot of ‘cents’ BY PAT KAUFFMAN LANCASTER Money, the making and keeping of it, was the reason behind the recent spectacular price of Lime-Hollow Elevation Jessie. While Jessie’s genetics and records were the reasons for her selection as the cow to purchase, in vestment tax credits, tax shelters, and long-range capital gains were the reasons behind Jessie Partners’ search for a cow. M. Robert Young, one of two general partners in Jessie Partners, has been involved in other part nerships. In particular, he and Martin Y. Sponaugle, the group’s attorney, are also currently involved in a partnership comprised of three general partners and nineteen limited partners and the purchase of a cow nicknamed Tilly. In both the Jessie and the Tilly partnerships, the structure is generally the same. Two or three in dividuals serve as general partners in the group taking care of the purchase, maintenance and sale of the animals. In addition, there are varying numbers of limited partners. These limited partners are limited both to their participation in the group and to their liability. In other words, the limited partners are strictly investors. Sponaugle explained the interest in purebred cattle. “Suppose a person were to buy a $50,000 cow. And also suppose that the person is Your New yazoo Dealer 18 acres a day The reason it’s designed around the exclusive Yazoo Transaxle Add the famous Yazoo longevity, and you’ve got something you should look into It costs about half as much as a tractor with mowing rig Comes with 76" 60" 48", 42” or 36" cut Other attachments available HotlUUf&l'b FARM MARKET 1755 WEST MAIN ST. V* mi west of Ephrata on Rt 322 currently m the 50 percent tax bracket. By his purchase of the animal, he comes under the heading of farmer and can make use of credits and accelerated depreciation normally available to fanners.” “Now let’s say that on this $50,000 cow, the purchaser takes the first year in vestment credit of 10 percent or $5OOO. In the 50 percent tax bracket, this is equivalent to a $lO,OOO deduction. If the person then assigns a life to the cow of 7 years, he can depreciate her at what would amount to a $10,700 deduction. And if he holds the cow as breeding stock for at least two years, he can claim an additional $2OOO. In total then,” claimed Sponaugle, “the buyer can claim a first year deduction of $22,700. And if he pur chased the animal with a 30 percent down payment or $15,000, he has recovered his investment the first year.” Sponaugle added,“What you have to remember is that the tax advantages are all in the front end here. The investors are looking for a gain-over the long term. And that gam will eventually be taxable.” Sponaugle was quick to point out that these part nerships come under the Securities and Exchange Commission’s regulations and are fraught with pitfalls. “Many attorneys are not really familiar with all the regulations governing these partnerships.” Caution, he emphasized, must be exercised even by those who have a working relationship with the myriad of laws to assure compliance with all the regulations. The internal workings of a partnership are' set up dif ferently for each one. But in the partnerships recently set up by Sponaugle, a main tenance contract is issued for the care of the cow and her off-spring which, if the buyer hopes to take ad vantage of capital gains tax breaks, must be held until the age of two. “You’re entrusting the farmer with a sizeable investment, and much of the success of the investment depends on the care the animal receives.” The biggest hazard m the investment in purebred cattle, is the possibility of sterility, Sponaugle noted. The second as he sees it is the production of an excess number of bull calves, and the third is the uncertainty of economic conditions that could make the availability of purchasers for high priced off-spnng a problem. Sponaugle noted that while each partnership is dif ferent, shares are generally sold to less than 25 partners to ease the restrictions on the group. While Sponaugle declined to indicate the size of the individual investments needed and the projected profits, he noted that the size would be relative to the purchase pnce and the number of investors in the group, and the profits would have to keep pace with existing returns on govern- 717-738-1131 $116,000 cow Young explained he is in charge of purchasing and selling and Crouse is m charge of Jessie’s care. The other partners are simply investors. The limited partnership arrangement is used as a tax shelter and is regulated by the Securities and Exchange Commission. Jessie was bred by Benny Gunzenhauser, New York and was co-owned by Ron Mueller, Illinois. What prompted the owners to sell such a landmark cow? Young theorized that the geographic distance bet ween the owners and the fact that Jessie as a six year old is now in her pnme were the two determining factors. Contending bidder at the auction was Larry Kibler and Associates, Stanley, Virginia. ment bonds, currently The Great Expectations around 15 percent. Chapter Three auction was In addition, to attract the third annual auction held investors, it would be m Lancaster County and co necessary to project a return managed by Young. He of closer to 20 percent per explained he tries to get year on the partners! Junds. cows with both outstanding While he expressed great pedigrees and outstanding hopes for Tessie and looks for the prestigious satisfaction with the previous partnership in- The purchasers’ part- to Poverty Hollow Milestone volvmg Tilly, he noted that nershin was formed when 10 j the structure of the part- S leLSesTwas to be ** , b f- mtr( ? uce J to nenfc.p. was stad.eC dU SS* emb^o and took a sizeable chunk of Average nrice for all i 8116 * time and study to institute, animals auctioned including ved. Recently one of This area he cautioned is for animals aucQonea, including j essie ’ s daughters brought eSonlv Jesse, was $9150. $3!,000 in Reno, Nevada, y- Jessie is currently in calf according to Young. [liliSoW’S! mMmtL 1 I MACHINERY—TRACTOR CONSIGNMENT SALE SATURDAY, APRIL 5,1980 (Continued from Page Al) eighth generation to have completed a 20,000 pound' lactation. To my knowledge there are no other cows in the U.S. with both these distinctions.” The purchasers, Jessie Partners, have entered into a limited partnership. The twa leading or general partners in the group are Young from Lancaster and Galen Crouse on whose farm Jessie is stabled. In addition to the general partners, there are five limited partnerships belonging to Robert and James Humphreville, Lancaster; Stanley Brunn, New York; Elden Bjurlmg, Massachusetts; Ty Myers and Larry Wyles. ! 10:30 A.M. I Located 1 mile South of Sheds, N.Y. on Route 13. | TRACTORS & INDUSTRIAL EQUIPMENT IFord 4600 Diesel 1010 hrs.; JD 50 wide 3 pt; IH 706 D; ffl 560 D; Oliver 1955 - New Motor; IH 450 D; Oliver 77 gas; JD 620 - Hi clearance; Belarus 250; Ford 800; AC WD w/half tracks; Ford 3000 w/loader; Oliver 1950 T; IH 450 Gas; JD A: Oliver 800; Case X 400 Diesel w/3 pt.; AC Dl7; JD A w/3 pt.; IH 656 Utility w/loader; MF 85 gas; Ford I 5000 w/IH 2000 loader; JD 4230 w/4 post rollguard; JD A electric-start-new paint; I Case 800 log skidder w/new motor, winch & chains; Army 6x6 w/Crane loader-log i clam; Ford 4500 Backhoe & loader; IH T 6 Crawler; IH TD24 Crawler; Case 450 I Crawler loader; 8 ton 2 axle pentle hook trailer; General 9 ton 3 axle skid steer loader; 5 75’ Owatonna 1700 - water cooled hydro; NH 2500 2 yr. old; 72’ Case 1530; 70’ Melroe M I 500; 71’ Melroe M 700; Lorraine 4x4 loader, 1 yard bucket. | HAY EQUIPMENT 2 JD 224 baler w/#3O ejector; 9x16 Kicker rack w/heavy gear; 9x16 Kicker rack new I last summer; 3- NH 469 haybine; Kuhn hay tedder; 30’ hay elevator; Gehl 72 A flail £ chopper; NH 56 rake; 26’ smoke elevator; Nicholson hay tedder; Ford 3 pt. mower; ■ Ferg. 3 pt. PTO rake; NH 66 baler w/motor; New 9x 16 hay rack w/gear; Fahr hay £ tedder (like new); NH 479 haybine; AC 3 pt. mower; JD 1209 mower conditoner; MF 3 r pt. mower (Nice) JD flail chopper; hay head for 770 chopper; Kicker rack & gear; JD I mower conditioner. I PLANTING & TILLAGE EQUIPMENT i IH Transport drag; JD 3 bottom trailer plow; IH 470 disk 13’; Bnllion 10’ £ Cultipacker; IH 4 row 2 pt. Cultivator; JD 4 bottom, trailer plow; 12’ Transport disk; * Brillion 14’ transport Harrow; MF 4 bottom semi-plow; JD #630 14’ plowing disk; I Bnllion 16’ trans. harrow; IH power set harrow; JD 5 bottom semi-plow; IH 540 4 f bottom semi-plow; JD 2 row com planter; NI3 pt. fert. spreader; IH 56 4 row com Z planter; JD 494 A 4 row planter w/Insecticide Attachment; United Farm Tool fert. I spreader; 4 ton hyd. fert. auger wagon. I HARVESTING EQUIPMENT I IH 1 row com picker; JD table blower w/pipe; Lamco self-unloading wagon; New f Idea blower - used 1 season; Gehl chopper w/2 heads; JD 60 L blower; Gehl 600 r chopper w/2 heads; NH 2 row com head for 880,890; JD 112 self-unloading wagon; NH I 770 2 row narrow chopper w/pickup head (sold separate); AC hopper blower; Gehl * hopper blower; IH 56 blower; Gehl chopper; AC Table blower. j MISCELLANEOUS f IH 540 spreader w/hyd. end gate/ Bamomatic can; 2 - yellow devil sprayers; 2- Z gravity boxes; Surge milker pump w/6 electnc pulsation units; 2-5 ton running gears; I Hawk Barrel spreader; 1970 Ford 3/4 ton pickup w/cattle rack; AC PTO Spreader; Chevy Truck w/cattle rack; 18.4x34 snap on duals; Windbreaker for 706; Wind breaker for 656; Water fowls; 66 Dodge 1% ton track. Consignments received up to April 4th, 5:00 P.M. Auctioneer; Ted Steth Auction Service Cincinnatus, N.Y. 607-863-3875 or Carl Darrow Sheds, N.Y. 315-662-3826 i Terms: Cash or good checks approved by auctioneer. » Eats available. I Farm Calendar (Continued from Page Alo,' tnomreV; hguorht yadsertdeW. draykcaß tiurf gmworg; 03:9-03:11 m.a.; dna 03:7- 03:9 m.p.; mraF dna emoH retneC, retsacnaL. S’LIRPA SLOOF; 11a yad. Wednesday, April 2 Hunterdon, N.J.; County Board" of Agriculture monthly meeting; 8:00 p.m.; Extension Center. Red Lion FFA banquet; 6:30 p.m.; Red Lion Senior High School. Lancaster County Con servation District’s monthly board meeting; 7:30 p.m.; Farm and Home Center, Lancaster. Thursday, April 3 Adams County stone fruit pruning; 9:00a.m. Friday, April! Pennsylvania Relief Sale, Mennonite Central Committee; Farm Show Building; through Saturday. Saturday, April 5 Maryland Polled Hereford Sale; Frederick Fairgrounds, MD. 4P 'i r
Significant historical Pennsylvania newspapers