The time is now for producers to think about year-end tax planning, according to North Dakota State University Extension Farm Management Specialist Ron Haugen. Haugen says it is best to start with year-to-date income and expenses and estimate those amounts for the remaining days of the year. This is important because for all or most government payments that producers received during the year must be reported as income in the year it was received.
Important items to remember for tax planning include:
• Producers are allowed use 200% declining balance depreciation on up to 10-year properties and 150% for up to 20-year properties.
• For most new ag machinery, the recovery period is 5 years.
• Section 179 expense has increased, allowing producers to deduct up to $1,050,000 on new or used equipment.
• Additional, 100% first-year bonus depreciation is in effect.
• Net operating loss carryback rules are in effect.
• Like-kind exchanges are not allowed for personal property but are for real property.
• Income averaging can be used to spread the tax liability to lower income tax brackets.
Read more important tax items to note and tips for end-of-year planning.
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