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Accountant urges farmers to examine new federal tax law impacts

An accountant says the new federal tax law might require changes on the farm to keep from paying too much in taxes.  Austin Burby with Clifton-Larson-Allen CPA’s says what’s right for one farm might not work well for another. “Some of the big things are going to be the 20% business income deduction, the 199 cap-A, kind of whatever you want to refer to it as. (As far as) the mechanics of it, there are still a lot of unknowns.”

And, Burby says things like land rental contracts might have to be re-worked. “How your land rental entities are set up? Who’s paying the rents?  How are those leases structured? We just got finalized regs (regulations) issued from the IRS and it might make sense to raise or decrease rents again accordingly to kind of maximize where those benefits are going to be taken, and also modifying terms.”

Burby tells Brownfield farmers should also review if an “S’ corporation or a “C” corporation best fits their long-term goals. “If you would look at an exit situation, the selling on it’s face seems like the “C” corp is the more efficient way to go with the 21% flat rate, but that double layer of tax seems to lose that benefit very, very quickly.”

Burby urges farmers to sit down with their tax professionals and figure out what saves money and helps meet the long-term business goals of the farm.

Listen to Austin Burby’s interview with Brownfield about tax issues here: