An update earlier this week from K·Coe Isom explained that, “The national ag accounting and business advisory firm K·Coe Isom said the tax bill passed by the U.S. House of Representatives today presents opportunities for many farmers but only if they develop plans taking into consideration changes to the tax code.”
The update stated that, “‘In consultation with their tax professional, farmers should consider the following year-end strategies:
- Defer income to next year and pay deductible expenses this year. Depending on your individual circumstances, you could have lower tax rates in 2018.
- Pay all assessed 2017 property tax and any likely amount of personal 2017 state income taxes. Note however that payments could be subject to limitations if you are subject to the alternative minimum tax.
- Make year-end purchases of new and used equipment. Under the tax bill, 100% bonus depreciation starts for property placed in service on or after September 28, 2017. This includes used equipment so there could be advantages to year-end purchases.
- The ability to carryback net operating losses for farming operations will be reduced from a five year carryback to two years after 2017, so this year will be your last opportunity to recoup some income taxes from five years ago.
- Make your charitable donations in 2017. If you are going to make charitable donations in 2018, consider making some or all of them in 2017 in case your standard deduction is more beneficial next year.”
The update added that, “In addition to year-end tax planning, K·Coe Isom recommends that businesses take a fresh look at their operations in 2018 and think about whether restructuring or adjusting operations will make sense in light of the changes in this bill.”
