05/23/06 New tax law good for farmers and ranchers

American Rancher May 23, 2006 President Bush recently signed tax legislation into law that will keep lower capital gains rates on the books for two more years, through 2010. The Tax Increase Prevention and Reconciliation Act contains a two-year extension of the 15-percent maximum capital gains tax rate. American Farm Bureau Federation tax specialist Pat Wolff says that is good news for U.S. farmers and ranchers. Wolff: "Eighty percent of what a farmer needs to run his business is a capital asset. That means when he sells it he pays capital gains taxes. When that tax is high it is harder for him to sell the things he doesn't need to raise the cash to buy the things he does." Wolff says the tax law offers other relief too. Wolff: "The bill also contains a provision that will help farmers pay for the equipment they need to run their business. It is called small business expensing. Farmers will be able to write off more of the cost of their equipment when they buy instead of having to wait a lot of years to depreciate it over time." And Wolff says congress still has some other tax legislation in the works. Wolff: "A vote on permanent death tax repeal is coming up in June. And also in the works is a tax bill that would help increase the production of domestic energy." I'm Bob Hoff.