Revised Bulletins Discuss Tax Management and Farm Corporations - Agricultural Engineering Newsletter, September / October, 2002

A pair of recently released publications from MidWest Plan Service (MWPS) provide updated information about two issues fundamental to good farm business management: taxes and farm corporations.

Income Tax Management for Farmers, NCR-2, by George Patrick of Purdue University and Phillip Harris of the University of Wisconsin, is a guide to helping farm business managers minimize income taxes while maximizing after-tax income. Patrick says the publication helps farm business managers understand the tax consequences of their business decisions. He notes that managers don't need to be tax experts, but says they must know enough about taxes to understand how business decisions affect taxes in a tax year and in the future.

Income Tax Management for Farmers describes some of the major tax planning decisions farm mangers face; it also includes a list of tax items managers often overlook. Main topics of discussion include depreciation, government payments, special rules for droughts and other disasters, capital gains and losses, and income averaging for farmers. The publication features a worksheet that enables farm business managers to estimate their federal tax liability anytime during the year.

Patrick cautions that this publication is a guide to managing taxes, not to preparing tax returns. For that information, he says, tax preparers need to consult the Farmer's Tax Guide (IRS Publication 225), which is revised and published annually to keep farmers abreast of changing tax laws.

The Farm Corporation, NCR-11, by Neil Harl of Iowa State University and Roger McEowen of Kansas State University, is a basic review of all issues related to organizing a farm business as a corporation. The publication discusses the nature of a corporation and considers some of the advantages and disadvantages of incorporating a family farm. It also discusses the taxation of corporations and tax-option corporations, describes the process of incorporation, and explains how farm corporations operate. Particularly useful elements in the publication include one table that compares farm business organizations and another that presents the statutory provisions applicable to farm corporations in the 13 states of the North Central Region of the U. S.

Harl, who is the Charles F. Curtiss Distinguished Professor of Agriculture at Iowa State University, and McEowan say the need for current information about farm corporations and the existence of some special income tax provisions for small corporations prompt a new look at the farm corporation and make the release of NCR-11 very timely. The authors say those interested in farm corporations can get a good understanding of the topic from NCR-11, but, they note, the advice and service of an attorney are indispensable in organizing and operating a farm corporation.

Both NCR-2 and NCR-11 are revised versions of earlier publications, and both contain tax and legal information current as of September 2002. With their emphasis on practical advice and the decision-making process, these publications should prove useful to farmers, educators, lenders, consultants, and others involved in farm business management. Both publications were developed under the auspices of the North Central Farm Management Extension Committee (NCFMEC), which is a collaborative effort of farm management specialists from major land-grant universities and Extension Services.

Income Tax Management for Farmers, NCR-2 and The Farm Corporation, NCR-11costs $5.00 each per single copy. Price includes tax and shipping. To order these or other Midwest Plan Service Publications send check (sorry we do not except credit card orders) or money order to:

Agricultural Engineering
Michigan State University
A.W. Farrall Hall
East Lansing, MI 48824-1323
(517) 355-4720



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		September / October, 2002 Revised Bulletins Discuss Tax Management and Farm Corporations A pair of recently released publications from MidWest Plan Service (MWPS) provide updated information about two issues fundamental to good farm business management: taxes and farm corporations. Income Tax Management for Farmers, NCR-2, by George Patrick of Purdue University and Phillip Harris of the University of Wisconsin, is a guide to helping farm business managers minimize income taxes while maximizing after-tax income. Patrick says the publication helps farm business managers understand the tax consequences of their business decisions. He notes that managers don't need to be tax experts, but says they must know enough about taxes to understand how business decisions affect taxes in a tax year and in the future. Income Tax Management for Farmers describes some of the major tax planning decisions farm mangers face; it also includes a list of tax items managers often overlook. Main topics of discussion include depreciation, government payments, special rules for droughts and other disasters, capital gains and losses, and income averaging for farmers. The publication features a worksheet that enables farm business managers to estimate their federal tax liability anytime during the year. Patrick cautions that this publication is a guide to managing taxes, not to preparing tax returns. For that information, he says, tax preparers need to consult the Farmer's Tax Guide (IRS Publication 225), which is revised and published annually to keep farmers abreast of changing tax laws. The Farm Corporation, NCR-11, by Neil Harl of Iowa State University and Roger McEowen of Kansas State University, is a basic review of all issues related to organizing a farm business as a corporation. The publication discusses the nature of a corporation and considers some of the advantages and disadvantages of incorporating a family farm. It also discusses the taxation of corporations and tax-option corporations, describes the process of incorporation, and explains how farm corporations operate. Particularly useful elements in the publication include one table that compares farm business organizations and another that presents the statutory provisions applicable to farm corporations in the 13 states of the North Central Region of the U. S. Harl, who is the Charles F. Curtiss Distinguished Professor of Agriculture at Iowa State University, and McEowan say the need for current information about farm corporations and the existence of some special income tax provisions for small corporations prompt a new look at the farm corporation and make the release of NCR-11 very timely. The authors say those interested in farm corporations can get a good understanding of the topic from NCR-11, but, they note, the advice and service of an attorney are indispensable in organizing and operating a farm corporation. Both NCR-2 and NCR-11 are revised versions of earlier publications, and both contain tax and legal information current as of September 2002. With their emphasis on practical advice and the decision-making process, these publications should prove useful to farmers, educators, lenders, consultants, and others involved in farm business management. Both publications were developed under the auspices of the North Central Farm Management Extension Committee (NCFMEC), which is a collaborative effort of farm management specialists from major land-grant universities and Extension Services. Income Tax Management for Farmers, NCR-2 and The Farm Corporation, NCR-11costs $5.00 each per single copy. Price includes tax and shipping. To order these or other Midwest Plan Service Publications send check (sorry we do not except credit card orders) or money order to: Plan Service Secretary 216 Farrall Hall East Lansing, MI 48824-1323 Click here to view other Midwest Plan Service Publications. Agricultural Engineering Michigan State University A.W. Farrall Hall East Lansing, MI 48824-1323 (517) 355-4720 Questions or comments contact: webmaster Past Newsletters \| Agricultural Engineering Home \| Michigan State University Home October 8, 2002