A32-Lancaster Farming, Saturday, February 20, 1988
Adams Co.
BY
GINGER SECRIST MYERS
Adams Co. Correspondent
YORK SPRINGS The
Adams County Cooperative
Extension Service and Atlantic
Breeders Cooperative combined
their efforts here Thursday even
ing, February 11th, to provide loc
al dairymen with a more com
prehensive Adams County Dairy
Day program.
The meeting commensed with
an evening meal at the York Spring
Fireball. It was followed by a
detailed explanation of tax
changes regarding pre-production
costs for raising herd replacements
presented by Roland Freund, PSU
Regional Farm Management Spe
cialist, and Atlantic’s District
Meeting.
Freund noted that the 1986 Tax
Reform Act which was to simplify
the tax structure, has complicated
the picture in agriculture. One
example of this is that previously
dairymen deducted the costs of
raising their replacements each
year. Any proceeds from cattle
sold had previously been treated as
capital gains in the year in which
they were sold.
Freund explained, “The 1986
Tax Reform Act decided that it
was time to get tough on business.
Now dairymen must decide how to
handle all their preproduction
costs up to freshing. And, since the
IRS has determined that life begins
at conception, those costs must
also include insemination costs or
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ET transfer work. He must also
allot a portion of fixed costs such
as building repair and insurance to
his heifer raising costs.”
The discussion went on to out
line the effects of either capitaliz
ing those costs or choosing the
modified acceleration cost recov
ery system when filing your taxes.
In the final analyses Freund sum
marized that the best choice of
these two alternatives depended on
each dairymen’s individual
situation.
Freund cited two examples
when it may be more advantage to
capitalize these expenses. One was
a dairymen who planned to sell his
herd in the next 4-5 years. Capitali
zation would increase his taxable
income now and would increase
his social security basis.
Another situation where capita
lization may be helpful is a young
person purchasing a herd with the
cattle still on depreciation. Since
he presently will have more deduc
tions than he can use, capitaliza
tion of the entire herd would help
take advantage of the extra
deductions.
During Atlantic’s portion of the
meeting, two dairymen were rec
ognized for having herds that were
at least 10 percent above the state
average for milk or butterfat pro
duction and more than two-thirds
of the cows and progeny of Atlan
tic sires. These awards were pre
sented by Scott Osborne, Atlan
tic’s Field Supervisor for this area.
Those honored were Milton
Hoffman, Gettysburg with a RHA
on 46.1 cows of 19,602 pounds of
milk and 754 pounds of butterfat.
Hoffman’s herd has 91 percent of
the cows sired by Atlantic sires.
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Also honored was the herd of Roy
A. Weaner, Gettysburg. Weaners
herd is 73 percent Atlantic sired
and averaged 19,663 pounds of
milk and 703 pounds of butterfat
on 56.7 cows.
The meeting concluded with a
narrated slide presentation pre
sented by management represerita-
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Uve Gary Heckman. It reviewed
the basic principles of cattle breed
ing and highlighted several of
Atlantic’s current sires. Heckman
emphasized that genetic levels
have increased on their proven
sires while average semen costs
are lower than one year ago.
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