President Obama's Tax Reform Proposals
The key one is the President would like to element the provision of step-up in basis and what that means if you purchased farm land $100 an acre 50 years ago for example and then gift it to one of your children or grandchildren or they inherit it and it is currently worth $10,000 an acre. He would like to tax that like as if it was sold for current value — so there would be a capital gains taxed owed on the $9900 gained. In addition he would like to raise the maximum capital gains rate from 20 percent in most cases up to 28 percent.
Neiffer adds it is something that farmers and ranchers need to pay attention to recognizing that the Republican-controlled House and Senate are not likely to pass these provisions as presented.
Neiffer: “It is something to be aware of. Like I say, I don’t think neither of those provisions as he proposes it — there is no way either one of those provisions will pass. But parts of those provisions could be discussed or incorporated as part of the tax reform if that happens this year or next year.”