Trader’s Dispatch, December 2013 — Page A10
2nd CUTTING ALFALFA HAY FOR SALE
Plan now for taxes
By Kim Dillivan, SDSU Crops Business Management Field Specialist Accounting Method Agricultural producers choose an accounting method for tax purposes when they file their first federal income tax return. Most farmers prefer the cash method of accountDISK DRILL FOR SALE ing rather than the accrual method because of the former’s 2009 Case IH SDX40 single disk drill with 3430 Precision Air cart, tow behind. Only 8500 ease-of-use and simplicity. The cash method requires inacres. Double shoot, good blades and scrapers. Good condition. Call for price. come to be reported in the year it is received and expenses Call 406-567-2632 or 350-2266 in the year they are paid. With accrual accounting, income is reported in the year earned and expenses are deducted in the year incurred. To change accounting methods requires IRS approval. Prepaid Expenses and Deferred Income The ordinary and necessary costs of operating a farm are deductible business expenses. One example is prepaid farm expenses such as fertilizer, seed, and chemicals. Producers Bred to low birth weight Angus Bulls will often receive a discount for the fall purchase of these 50 heifers to calve February 1 to March 11 items. Generally, producers using the cash method of ac120 to calve March 12 to April 5 counting can deduct prepaid expenses in the year they pay 40 to calve April 6 to May 10 for them, equal to an amount not exceeding 50 percent of $1850 per head ~ offering volume discounts their other deductible farm expenses. Phone 6 Diamond Ranch, 406-735-4399 Producers can also defer income into 2014 using a deferred early mornings or evenings payment contract. For example, a grain producer using a calendar tax year and the cash method of accounting has grain sales in December but receives payment sometime in 2014. With a deferred payment contract this sale is recorded as 2014 gross income. Changes for 2013 One change in the 2013 tax law is the self-employment tax rate. For 2013 the social security part increases from 10.4% to 12.4%. This increase represents a return to the rate (12.4) in effect prior to 2011. The Medicare part remains the same at 2.9 percent. As a result, the selfemployment tax rate increases from 13.3 to 15.3 percent. The maximum net earnings subject to the social security part of the self-employment tax increases to $113,700 for 2013. There is no maximum limit on earnings for the Medicare part. SeedMaster now offers Auto Zone Command™ & FLIP™ (Full Last Another tax law change concerns the standard mileImplement Pass) as standard features on its on-board and tow-behind tanks. age rate cost of operating vehicles used for business, such as a car or light truck. FLIP received the coveted Auto Zone Command prevents costly input overlap by For 2013, the standard mile2013 Gold Innovation Award at instantly stopping product flow in up to 10 metering age rate for operating your Canada’s Farm Progress Show zones. The more zones you control, the more money you own vehicle for business use will save. is 56.5 cents per mile. FLIP is SeedMaster’s patented mapping software that For further information FIRST SEEDED PASS activates Auto Zone Command and halts product flow the please see IRS Publication first time openers pass through an overlap area. Product is FLIP VIRTUAL PASS - LAST SEEDED PASS 225, Farmer’s Tax Guide then applied on the last pass, preventing double seed and NO OVERLAP 10 ZONES OF OVERLAP CONTROL (http://www.irs.gov/pub/irsfertilizer from being applied, and avoiding any seedbed CONTROL pdf/p225.pdf). The IRS tax disturbance. guide contains 16 chapters, 3200 sq. ft. 320 sq. ft. The Big Payback – Savings using a 10 zone, 80 ft. drill each focusing on a particular Overlap%Overlap%Cost tax topic. Some of the topics No Zone Auto Zone Savings Savings/ Year Acres Command Command per Acre Total Acres covered include accounting 1 5,000 7.30% 1.20% $6.38 $31,903 methods, sources of income, $6.38 Cost Savings/Acre/Year x 5000 Acres deductible expenses, depreBased on $104.60 /Acre Average Input Cost ciation, gains and losses, and = $31,903 Input Savings/Year self-employment taxes. The 4 5,000 7.30% 1.20% $6.38 $31,903 The diagram illustrates how SeedMaster’s Auto Zone Command guide contains timely, useturns off seed and fertilizer to each zone during headland passes. 5 5,000 7.30% 1.20% $6.38 $31,903 ful information and includes Without Auto Zone Command, the large area in red would receive double inputs, wasting considerable dollars. TOTAL 5 YEAR SAVINGS = $159,515 many beneficial examples. The guide also references many other IRS publications needed for specific For more information on SeedMaster’s Auto Zone Command or FLIP tax subjects or questions. contact your local SeedMaster dealer or call 1.888.721.3001. The publication begins with a summary of the tax law changes for 2013. 110 ton – Approximately 1400# average round bales – Net wrap Call 406-279-3256, Valier, MT – Leave message
210 ANGUS BRED HEIFERS FOR SALE
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