Loss of 1031 for Personal Property Could Create Recapture Woes in Iowa
Last month, we shared an article detailing some Section 179 issues impacting Iowa taxpayers. As the Legislature is currently debating tax reform options, it is important that these issues are not lost in the discussion.
These issues are not the standard, "We need more Section 179." Rather, Iowa tax law currently prevents some taxpayers who are owners of entities from ever depreciating their property if the Section 179 allocated to them exceeds certain limits. Second, the repeal of federal like-kind exchange treatment for personal property could mean that many trades will be subject to significant Iowa recapture if Iowa goes along with that treatment. While federal law allows 100 percent bonus and $1 million Section 179 to offset the loss of the Section 1031 treatment, Iowa law does not. As Iowa considers tax reform, these issues must be considered together.
Read more about this issue here.
We have a lot of events scheduled for 2018, and we hope you'll plan to join us! Watch for more details on our website, in future newsletters, and in a CALT Connection that we will mail to our subscribers after tax season is over (you are almost there!). We will be hosting a number of webinars, including webinars that will be scheduled when guidance on the new law is issued. We are also hosting two in-person (and online) seminars, in additional to our regular tax school schedule. Please put these dates on the calendar. We hope to see you there!
July 12-13, Entity Planning in the Wake of the Tax Cuts and Jobs Act (Ames, Iowa and Online)
This seminar will review the latest of what is known about the Tax Cuts & Jobs Act and its impact on entity planning as of mid-summer. Included in this seminar will be a detailed review of issues arising when converting from a C Corporation to an S Corporation and vice versa as well as factors to consider when evaluating entity options.
September 20-21, Agricultural Law Seminar and Farm Tax Workshop (Ames, Iowa and Online)
Our annual September Seminars will include two days with an intense agricultural focus. Day one will include a number of speakers bringing you the latest issues impacting agricultural attorneys, advisors, businesses, and their clients. Day two will be a farm tax workshop, integrating the new tax law into agricultural tax planning and return preparation
Fix to "Grain Glitch" is Now Law
President Trump signed the Consolidated Appropriations Act, 2018, H.R. 1625, on March 23, 2018. At the end of the 2,232-page legislation, Congress included a section written to “fix” the “grain glitch.” This is, of course, the provision in the Tax Cuts and Jobs Act that provided significantly higher tax deductions (in most cases) to patrons who sold commodities to cooperatives rather than to non-cooperatives.
The 17-page “fix,” while attempting to level the playing field, adds even more complexity to an already convoluted section of the new tax law, IRC § 199A. The fix retroactively takes effect, beginning January 1, 2018. This wipes from existence the provision giving cooperative patrons a 20-percent deduction based upon gross sales.
Under the fix, the tax benefit to a farmer who sells grain, for example, to a non-cooperative does not change. These farmers are generally entitled to the new 20 percent 199A(a) qualified business income (QBI) deduction, calculated based upon their net income from the sale. Their overall 199A deduction is limited to 20 percent of taxable income (minus capital gains). It is also restricted by a wages/capital limitation if their income exceeds $157,500 for singles and $315,000 for those who are married filing jointly.
Continue reading here for more detail and several examples.
New Law Will Offer More Healthcare Options for Iowans Priced out of Individual Market
On April 2, 2018, Governor Reynolds will sign SF 2349 into law. This new law is designed to address the mounting difficulties faced by many Iowans seeking to purchase health insurance on the individual market. Specifically, the law is designed to offer two new healthcare benefit options for small employers and sole proprietors, the groups most impacted by Iowa’s healthcare crisis. These options include allowing Farm Bureau and Wellmark Blue Cross & Blue Shield to offer new "health benefit plans" and allowing small employers (including sole proprietors) to join together to create Association Health Plans to offer group health coverage to their employees.
New “Health Benefit Plans”
The bill would first create Iowa Code § 505.20, a provision to allow Iowa Farm Bureau to offer new “health benefit plans” to its members. These plans would “be deemed to not be insurance” and would thus be exempt from Affordable Care Act requirements and Iowa Insurance Division regulation. The plans would be self-funded and subject to third-party administration by Wellmark Blue Cross & Blue Shield.The Legislative Services Agency, in its Fiscal Note for the bill, estimates that the plans would cost roughly $5,000 per year per family.
Continue reading here.
Spending Bill Exempts Animal Farms from Air Emission Reporting
The Consolidated Appropriations Act, 2018 (Omnibus Bill), signed into law, on March 23, 2018, has exempted the reporting of "air emissions from animal waste at a farm" under CERCLA. This exemption is included in Title XI of the Act, called the “Fair Agricultural Reporting Method Act” or “FARM Act."
This exemption was enacted because of a decision on April 11, 2017, by the United States Court of Appeals for the District of Columbia that vacated an EPA final rule that had been in place for nine years. The rule—called the CERCLA/EPCRA Administrative Reporting Exemption for Air Releases of Hazardous Substances from Animal Waste at Farms—exempted most farms from CERCLA and EPCRA reporting requirements for air releases from animal waste. The court ruled that the EPA had exceeded its statutory authority in granting the exemptions. The court order subjected approximately 44,000 new commercial animal farms to reporting requirements the EPA had characterized as "costly and burdensome."
To continue reading, click here.
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 email@example.com or (515) 294-5217. You can also give online with a credit card. We thank you for your generous support.
We're Here to Support You!
We know it's that time of year when many of you are working crazy hours completing tax returns for your clients. But Spring is here, and April 17 is around the corner! Thank you for taking the time to read our newsletter. Remember that we have a number of online resources that might be helpful to you as you wrap up those individual returns.
Syngenta Settlement Moving Closer to Approval
On March 12, plaintiffs filed a motion asking for preliminary approval of a settlement reached with Syngenta. The proposed settlement, which would comprise $1.51 billion, is described by plaintiffs’ counsel in a court filing as a “record-breaking achievement in agricultural litigation, the largest-ever GMO settlement in the United States.”
If approved and consummated, the proposed settlement would dispose of nearly all claims that were or could have been filed against Syngenta stemming from its development, introduction, production, distribution, sale, marketing, and efforts to gain regulatory approval of Agrisure Viptera and/or Agrisure Duracade corn seed. The proposed settlement class, which includes more than 600,000 proposed members, includes producers and non-producers.
If approved, the settlement class would exclude only 11 named exporters, including ADM and Cargill, as well as anyone who affirmatively opts out of the settlement class. If the settlement is approved, those who previously opted out of the MDL class or a state class must again opt out of the settlement class if they do not want the settlement to conclude their claims against Syngenta.
Continue reading here.
New on TaxPlace
March 28, 2018 The Scoop - March 28, 2018
March 16, 2018 Applicable Federal Rates (AFRs): April 2018
March 14, 2018 The Scoop - March 14, 2018
March 8, 2018 Inadequate Training of IRS Employees Harms Taxpayers
March 8, 2018 Summary of Tax Rates and Tables: Updated for 2018
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.