Looking for a Great Summer CLE/CPE Destination?
Have we got a few for you! This summer we will be holding Farm Income Tax, Estate, and Business Planning Seminars in Findley Lake, New York, Spearfish, South Dakota, and Lake Tahoe, California. For those not able to travel, our Lake Tahoe seminar will be broadcast live via webinar. We are also offering a number of shorter webinars this summer featuring important taxation and agricultural law topics. Registration is open for all seminars. We hope you'll join us!
Check Out Our New Ag Law Blog!
We continue to write articles bringing you the latest in legal developments important to ag law. To augment that, we've created a blog to more easily pass along timely observations and updates. We hope this new service will be an easy way for you to quickly glean information helpful to your business. Although we're still tweaking the format, we'll be adding functionality to include your comments so we can also launch some interactive conversations about what's important to you.
Considering a Gift of Grain?
The American Red Cross and other charities would benefit from your generosity. And, you could receive some tax savings in the process.
To survive scrutiny, a gift of grain must be unsold inventory in the hands of the farmer. Title to the commodity must be transferred to the charity before the grain is sold. For example, the corn would be delivered to the elevator with a storage receipt made out to the charity. The charity receives a letter from the farmer stating the corn belongs to the charity and that the charity may sell the corn as it sees fit. The grain elevator should only issue a check to the charity once the charity has given a specific instruction to sell.
If you are considering a grain gift, please consult with a tax professional to review any potential savings and to ensure that the proper steps are followed.
A gift of grain is different from a post-sale donation to the church or charity because the income from the grain is never received by the farmer. Thus, the tax savings flows from removing the income before recognition, rather than from taking a charitable deduction after recognizing the income. This can greatly benefit those taxpayers who do not itemize deductions. Furthermore, materially participating farmers benefit from gifting grain because lower income means less self-employment tax.
Full Replacement For the ACA Offered – Implications for Pending U.S. Supreme Court Case
The U.S. Supreme Court hears oral arguments next month in a case that could ultimately be the death knell for the Affordable Care Act (ACA). The case involves the Premium Assistance Tax Credit (PATC) of I.R.C. §36B, and the question before the Court is whether the credit is available to a taxpayer who acquires health insurance from a federal exchange. If it is not, then the ACA could be doomed because both the individual mandate and the employer mandate would be unraveled. In light of the Supreme Court decision which is expected by the end of June, legislation has emerged in the Congress that would repeal the ACA and replace it with new provisions. That’s important because the lawyers arguing the government’s position in the Supreme Court case were certain to argue that the Court shouldn’t eliminate the PATC for millions of taxpayers because there was no alternative legislation, and the Supreme Court could be inclined to leave the law in place if there is no reasonable alternative on the table
During 2014, several different federal courts issued rulings on the availability to taxpayers of the premium assistance tax credit. The ACA establishes the PATC to help offset the cost of health insurance premiums. Basically, the PATC is available (for the 2014 tax year) to an individual that has income between $11,490 and $45,960 during the year. For a family of four, the PATC is available in income ranges from $23,550 to $94,200. The text of the ACA states that that the PATC is available to anyone who buys health insurance from an exchange "established by the State...". Continue reading here.
FAA's Proposed Small UAS Rules Good News for Ag
The Federal Aviation Administration (FAA) has taken a large first step toward allowing operators to legally fly small “drones” or unmanned aircraft systems (UAS) for commercial purposes on a widespread basis in the United States. On February 15, 2015, the FAA released long-awaited proposed regulations to integrate small UAS (those weighing less than 55 pounds) into the national airspace, paving the way for myriad agricultural uses like croup scouting or soil sampling. These proposed rules, which are subject to a 60-day public comment period, are much less restrictive than many in the industry had feared. Although commercial UAS cannot legally fly until the rules are finalized, the proposed rules are a solid first step toward integrating the burgeoning technology into the national airspace. They are largely good news for agriculture.
As we’ve explained in past articles, although farmers can currently fly UAS for hobby purposes, the FAA has taken the position that flying UAS for any commercial reason—including farming uses—is generally prohibited. The only groups authorized to fly UAS commercially are those companies to whom the FAA has granted special exemptions. As of February, the FAA had granted 24 regulatory exemptions for the commercial use of UAS in the United States. These exemptions have allowed their recipients to use small UAS for commercial purposes by waiving the certificate of airworthiness required for other aircraft. These exemptions, however, still require the companies to fly their UAS only with a licensed pilot and only with a separate visual observer. Many were concerned that the FAA would integrate these costly requirements into their new small UAS proposal. That didn’t happen. Continue reading here.
Primer on the Income Taxation of Trusts and Estates
We get numerous questions at CALT concerning income tax issues associated with trusts and estates. This month we provide a short primer on a few of the basic principles of trust and estate taxation. We have and will continue to develop more in-depth articles on TaxPlace, but here we address some of the key points on a surface level.
Clearly the income taxation of estates and trusts is much more the focus of estate planners today than it was in the past. With the federal estate tax exemption being $5.39 million per decedent, the vast majority of estates have no need for estate planning as a means of saving federal estate tax. At the same time, however, income tax rates have gone up. With the compressed tax brackets that apply to trusts and estates, that puts income tax planning at a premium. Presently, the top bracket rate of 39.6 percent is reached when income levels exceed slightly over $12,000. When state tax is added in, and the net investment income tax, that rate could be nearly 50 percent.
General rules. Subchapter J of the Internal Revenue Code governs the income taxation of estates and trusts (I.R.C. §641, et seq.). Here’s a rundown of the basic concepts. Continue reading here.
Baby, It's Cold Outside!
We received this truck dashboard picture from a loyal reader in Minnesota today and had to pass it along for our readers in warmer climates. If -35 degrees has you down, remember there are only four more weeks of winter! The summer seminars are looking awfully good right now.
And, don't forget our free "The Scoop: Hot Issues from the Front Line" to keep you up-to-date on the latest tax information of relevance to you. Kristy Maitre's next session is March 4, from 8:00 to 9:00 a.m. We hope you'll join us!
Donate to CALT
As you know, our work at the Center is dependent on the fees generated by seminar registrations and gifts. If you would like to donate to further the Center's efforts, please contact our Program Administrator, Tiffany Kayser at firstname.lastname@example.org or (515) 294-5217. You can also give online with a credit card. We thank you for your generous support.
IRS Issues Limited ACA Penalty Relief
On February 18, the IRS issued Notice 2015-17, which provides important guidance regarding the dreaded IRC § 4980D excise tax (for violating Affordable Care Act market reforms) and its applicability to small employers. It also provides some limited relief from the penalty in certain circumstances, including the reimbursement of health costs for more than two-percent shareholders. The guidance instructs tax professionals to continue to apply Notice 2008-1 through at least 2015. Read our full article for a summary of the guidance.
IRS Grants Limited Form 3115 Relief
IRS recently issued Rev. Proc. 2015-20, which grants relief to businesses with less than $10 million in receipts or $10 million in assets, stating that Form 3115 will not be required in most cases, even with a change in accounting method. The new procedure also affirms that adopting a safe harbor is not a change in accounting method. For more information on the repair regulations, including the impact of this guidance, our 02/18/2015 webinar: Sorting out the Confusion and the Myths of the New Repair Regulations is available for replay to TaxPlace subscribers. Roger McEowen and Paul Neiffer answered a number of questions from attendees during this two-hour session.
From the Courts
Following is a sample of recent legal cases summarized on our website. See the complete collection here.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.