First Chester County Farm Sells Easements Through IPA Plan
WEST CHESTER (Chester
Co.) Chester County has seen
its first farm property have an
easement sold under the Pennsyl
vania Department of Agricul
ture’s Installment Purchase
Agreement (IPA) plan during a
recent settlement.
Closing occurred on the
84.35-acre Dennis and Eleanor
Bush farm on March 26. The
crop and dairy farm is located in
West Fallowfield Township,
Chester County. This is only the
second farm in the state to have
closed since the inception of the
state’s new Installment Purchase
Agreement Program.
“The success of this closing
can be attributed to the Bushs’
dedication to farming, and to the
diligence of the Chester County
Agricultural Land Preservation
Board,” according to Douglas
Wolfgang of the Pennsylvania
Department of Agriculture’s Bu
reau of Farmland Preservation.
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The IPA option enables farm
ers to gain better tax advantages
when selling their easements by
deferring all or part of the pur
chase price and the resulting
capital gains taxes for up to 30
years.
“Once again in 2002, Pennsyl
vania expects to strengthen its
national lead in Farmland Pres
ervation,” said Sam Hayes, Penn
sylvania secretary of agriculture.
“The Innovative Installment Pur
chase Agreement is another good
idea available to farmers as they
consider how to best preserve
their farmland for agriculture.”
The 84-acre dairy farm is lo
cated in West Fallowfield Town
ship in the town of Cochranville,
nearly on the border of Lancaster
County. Property owners Dennis
and Eleanor Bush purchased the
property in 1985 to expand their
farmland base, which includes an
adjacent property also used for
dairy farming. Since the couple
plans to maintain the property
for fanning use and has no inten
tion to sell to developers, they
committed to preserving the land
through the Department of Agri
culture’s preservation program.
Working with the local preserva
tion board, they learned about
the new IPA plan.
“We took a close look at the
IPA option with our accountant
and saw it as a good investment
opportunity,” said Dennis Bush.
“The IPA allows us to preserve
the land for farming use, while
enjoying tax-free income and a
strong rate of return. It’s also a
positive step for the state, be
cause it keeps more funds avail
able for preserving other farm
land.”
The first farm property in
Pennsylvania to use the IPA plan
to achieve similar goals was a
90-acre farm in Mount Joy
Township, Lancaster County,
If 11 ItsiIlif!lII S.lllllSillsl )|»I
which went to settlement in Jan
uary.
The IPA plan is designed to
enable farm owners to increase
what they get to keep, and not
just what they get, when selling
easements. The sellers can opt to
defer all or part of the easement’s
purchase price for up to 30 years
and defer capital gains tax for the
same period. In the interim, they
receive interest twice a year on
the outstanding balance; as with
a municipal bond, those interest
payments are exempt from feder
al and Pennsylvania state income
taxes. Later, the sellers’ heirs can
choose to sell the IPAs in the mu
nicipal bond market to pay estate
taxes or capital gains taxes.
Capital gains tax is due when a
seller receives payment for appre
ciated land or other assets. Capi
tal gain is the difference between
the sale price and the value of the
property when it was first bought
or inherited. The IRS taxes capi-
Crop Protection Available
POTTSVILLE (Schuylkill Co.) Regulations
covering non-insurable crop protection coverage
for 2002 crops have been published.
This establishes April 18 as the deadline for ap
plication to obtain yield guarantees for the coming
year.
Growers can obtain a 50 percent yield guarantee
by paying a $lOO fee for each crop selected. The
maximum fee per county is $3OO.
The Farm Service Agency will establish a nor
mal yield for each grower based on their past pro
duction records. If a catastrophic loss is suffered,
the grower will be eligible for benefits on those
losses of more than 50 percent.
Any crop which is not covered by crop insur
ance is eligible for this protection. The eligible
crops include peaches, plums, pears, cherries, apri
cots, string beans, watermelons, cantaloupes, cu
cumbers, pickles, pumpkins, broccoli, cauliflower,
onions, garlic, fresh tomatoes, eggplant, peppers,
among many others.
If you wish to participate in the total crop pro
tection program offered by the Farm Service
Agency, visit the FSA office on the Gordon Nagle
Trail by Thursday, April 18.
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Lancaster Farming, Saturday, April 6, 2002-A35
tal gains at a maximum rate of 20
percent, and Pennsylvania at a
maximum 2.8 percent rate.
Howard County, Maryland,
has used 30-year IPAs to buy
easements on 9,200 acres from 81
sellers since 1989. Similar pro
grams are under way in Harford
and Anne Arundel counties, Mar
yland; Virginia Beach, Va.; and
Burlington County, New Jersey.
Additional information regard
ing installment purchase can be
obtained from each county farm
land preservation board or by
contacting Doug Wolfgang at the
PDA’s Bureau of Farmland Pres
ervation at (717) 783-3167 or
dowolfgang®
state, pa.us. To discuss tax treat
ment of easement sales, contact
Michael W. Evanish, Manager of
the Pennsylvania Farm Bureau’s
MSC Business Services, at (717)
73 1-3546 or mweva
nish@pfb.com.
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