IT CONTINUES TO BE A TAXING SITUATION JESSE G. COOPER Farm Management Extension If you or your ” v tax preparer had a ( \ rough time pre paring your feder al income tax return this year, what better time than now to do nHI some tax planning, and even make changes so things will go better next year. Here are a few do’s and don’t’s Check My Records! Charles Wertz of Shoemakersville, Pa. had the 1984 Top Producing Flock In The Nation For Dekalb “My Equipment Is 11 Years Old And Still Performing Great I Credit The Big Dutchman Chain Feeder For My Excellent Results. I’ve Never Even Had A Chain Break.” Big Dutchman Does Indeed Get Results! Call Hershey - • Equipment For Your New Cage fNIA I VIIT/*nfll2lH House If You Want Above i/Ultfinidn® Average Results. that occur to me as I reflect back on some of the most common farmer tax problems I had to deal with this past season. If you are not doing so already, take the necessary time come next October to make a fairly reliable estimate of what your total farm income and expenses will be for the entire year. Add in any non farm income, expenses, adjust your personal deductions and exemptions for 1988 rates and cal culate your tax bill. Knowing what your year’s taxes are likely to be in October is certainly preferable to being in the dark till February or 310 EGGS PER HEN HOUSED rur HERSHEY EQUIPMENT HI (COMPANY, INC. Dosi§nors of QiiolHy System for Poultry, Swino ond Groin Hondiing March, when it’s too late to make many adjustments in the previous years business - and your only recourse may be a quick call to your banker with the object of bor rowing enough money to pay an unexpectedly large tax bill. That leads directly to my next suggestion. I’m well aware that there are many, many farmers across the State who are fiercely independent, and unwilling to share much information about their farming operations with any one (especially financial informa tion). That has to change. Few far mers are complete masters of every aspect of their profession, and they could measurably improve their operations if they would on occasion seek advice or help from other qualified people in the community. This may be a neighboring farmer, your farm accountant, banker, extension agents, a fieldman for your cooperative or other family mem bers. More and more farmers who in the past hired accountants to “do their taxes,” are leaning on them not only for tax management counseling but assistance in eva luating other farm financial deri- SYCAMORE INO PARK 255 PLANE TREE DRIVE LANCASTER. PA 17603 (717)393-5807 sions as well. Remember that the final decisions are still yours to make, but it doesn’t hurt to have someone help you think things through on occasion. All too often, tax problems arise when farms are sold. Part of the problem arises because under the new tax law all of the capital gain on these sales is now taxed at a maximum rate of 28 percent. How ever, not every seller has adequate records to verify how much he originally paid for the property. Adequate information is often lacking also on depreciation of assets. Lacking these and other records, the seller ends up paying more to the IRS than would have been necessary had this informa- * tion been available. Make sure that you have the tax information you would need should you sell your property. Again you might want to check this matter out with a tax , accountant NOW - not after the farm has been sold. Somewhat to my surprise, most families with young children have applied for or gotten Social Securi ty numbers for their youngsters. Members of the Amish and other Route 30 West at the Centerville Exit. Lancaster Farming Saturday, May 14, 1988-Dl7 religious sects should also know that there is a special Form 4029 they can fill out to exempt their children from the need to acquire a Social Security number. Any discussion of the new tax law as it causes problems for far mers cannot ignore the matter of preproductive expenses for lives tock requiring over two years to bring into production. The ques tion of whether or not a dairy far mer should continue to write off his calf raising expenses as a cur rent deduction on his schedule, or accumulate and recover these costs as depreciation once the heifer comes into production, is a sticky one. This decision has to be made on an individual basis, since it depends on the situation. Deduct ing heifer raising costs currently as has been our practice is obviously the easy way out, and perhaps when everything is weighed, the best way for most farmers to go. You may be the exception. I can only wonder how many IRS audi tors will have the courage to take on a farm audit and responsibly question the capitalization approach a particular farmer chooses to use. By the way, it is possible to get an extension of time to submit a completed tax return. You must, however, have a good reason for your request, such as information needed to complete your return not being available yet; death or health problems in the family, or a major disruption in your business - a fire, for example. The request for an extension must be filed prior to April 15 and must be accompanied by payment of the total amount of tax you expect to owe when the completed tax return is finally submitted. Belated discovery of additional expenses or income (or a 1099 you overlooked), even a mistake in addition, are all solid reasons why you should not hesitate to fill an amended tax return. It may be a smart move on your part to have a reliable lax preparer do it for you. I have one final suggestion related to our Pennsylvania incom e tax system. Our State has a parti cular feature on its PA 40 known as an SP that permits a reduction in an individual’s state taxes under cer tain conditions. Its primary pur pose is to reduce the state tax that must be paid by folks with limited taxable income and little financial support from other sources such as relatives. Nontaxable pensions and Social Security payments also need to be known to calculate the SP credit. Perhaps you know someone that could use an SP to save some tax dollars. Check it out New Live Poultry Vaccine Ready ASL/Schering is marketing the first federally licensed live F Strain MG vaccine. New F VAX-MG(TM) is being offered by ASL for easy mass administration as an aid in preven tion of clinical signs of Mycoplas ma gallisepticum infection. ' The vaccine contains a specially selected milk reacting vaccine strain for effective, low-cost vacci nation programming, the company said. Lyophilized for stability and convenience, the vaccine is grown with state-of-the-art fermentation technology for consistently high titers. It 4s tested rigorously to assure freedom from adventitious agents, the company said. Reprinted from April 18 issue of
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