2008 farm bill tax law changes other 2009 revisions
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2008 Farm Bill Tax Law Changes & Other 2009 Revisions. Tax rules that apply to farmers and ranchers. J C. Hobbs Assistant Extension Specialist OSU Dept of Ag Economics. 2008 Farm Bill Tax Law Changes . Conservation Reserve Program (CRP) payments

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2008 farm bill tax law changes other 2009 revisions

2008 Farm Bill Tax Law Changes & Other 2009 Revisions

Tax rules that apply to farmers and ranchers.

J C. Hobbs

Assistant Extension Specialist

OSU Dept of Ag Economics

2008 farm bill tax law changes
2008 Farm Bill Tax Law Changes
  • Conservation Reserve Program (CRP) payments
  • Preferential treatment for donation of conservation easements
  • Endangered species recovery expenses
  • Depreciation for racehorses
2008 farm bill tax law changes3
2008 Farm Bill Tax Law Changes
  • Limits on deduction of farm losses
  • Farm optional method paying for Self-Employment Tax
  • Commodity Credit Corporation (CCC) information reporting (1099-G)
conservation reserve program payments
Conservation Reserve Program Payments
  • CRP payments received after 2007 not subject to Self-Employment Tax for farmers who are retired or receiving disability benefits.
  • If not retired or disabled, must look at each situation to determine if SE Tax must be paid.
conservation easements
Conservation Easements
  • 2-year extension of charitable contribution deduction for cap gain property donated for qualified conservation purposes.
  • For qualified farmer or rancher; the amount of the deduction generally will equal the FMV of the property on the date of the contribution
  • Property must be donated during 2008 and 2009 tax years
endangered species recovery expenses
Endangered Species Recovery Expenses
  • After 2008, expenses incurred or paid for management practices under the Endangered Species Act of ’73 can be deducted in the year incurred versus capitalized over useful life.
racehorses
Racehorses
  • Racehorses that are placed in service after 2008 and before 2014 are given a 3-year depreciable life no matter the age.
limits in deductible farm losses
Limits in Deductible Farm Losses
  • After 2009, losses in a year when Direct or Counter Cyclical payments or any CCC loans are received the loss is limited to the greater of $300,000 or total net farm income for the previous 5 years.
  • Farm income = all income or loss from farming businesses.
  • Disallowed loss is carried forward and deducted.
  • Excludes loss from fire, storm, drought, or disease which are casualty losses and deductable in a different manner.
new threshold for farm optional method for self employment tax
New Threshold for Farm Optional Method for Self-Employment Tax
  • Tax years after 12/31/07, farmers can elect to get 4 quarters of coverage for Social Security retirement, disability, and retirement benefits .
  • This provides farmers or the family to acquire the needed quarters of coverage to obtain greater disability or survivor benefits.
  • A quarter of coverage for $1,050 of wages and now indexed for the future.
information reporting on ccc transactions
Information Reporting on CCC Transactions
  • New rule effective for farmers that repay CCC loans after Jan. 1, 2007, they will be issued 1099-G’s for the IRS 1099 matching program to insure proper reporting.
2009 capital gain rates
2009 Capital Gain Rates
  • Capital Gain is the amount of the sale price in excess of basis.
  • 0% capital gain rate for individual in the 10% and 15% tax brackets for 2008 through 2010
  • 15% capital gain tax rate for individuals in the 25%, 28%, 33%, and 35% tax brackets.
section 179 expensing
Section 179 Expensing
  • Assts with fixed life: 5, 7,10,15, or 20 years.
  • New rules for tax years beginning in 2009, the section 179 expense deduction is $133,000 subject to an investment limit > $530,000 of property placed in service.
  • Must not create a loss.
  • Purchased capital assets that must be depreciable.
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