Fourth Quarter Tax Planning

As we head into the fourth quarter of the year farmers and ranchers should be thinking about year-end tax planning, CliftonAllenLarson principle and Farm CPA Today blogger Paul Neiffer suggests
Neiffer: “What farmers need to be cognizant of right now as we get toward near year-end, they need a pretty good road map as to what their income and their deductions are looking like. Most farmers have their accounting on some type of computerized accounting system and really what you want to do is take where you are right now — say you have $100,000 of income and your goal is that you want to be at $50,000 income. You want to project: What income do I have coming before year-end over the next several months? How much cash expenses do I have going out? What’s my depreciation? Have I bought some fixed assets this year? You will have the depreciation from your prior years, plus your Section 179 or bonus appreciation or regular depreciation on a current year asset. If after all that planning you are still not at the number you want to be at, then you need to consider looking at doing some pre-paid farm expenses. You can go out and prepay for your fuel, your seed if you haven’t paid for it — other chemicals or fertilizer. But the key is that it has to be specific.”