Agriculture Weekly News Column

Tax Warnings!	Crop Profit Broadcast
Pesticide Recertification Training	Ag Is Still Important !!

Tax Warnings!

There is a risk of overkill in addressing year-end tax issues for farmers, but with a week to take action, and a short time to prepare tax returns, there is always a need for more information and resources. If you are involved with agriculture, as an operator, or a landowner, or as a tax preparer, here is an incomplete collection of resources and issues that may provide help in farm tax issues. The following tax tips and resources were compiled by Stu Ellis, University of Illinois Extension.

Changes in the tax law have brought many benefits to agriculture over the past several years, according to USDA’s Economic Research Service. In its November edition of Amber Waves, (http://www.ers.usda.gov/AmberWaves/November05/Features/ChangingFederalTax.htm) ERS says, “The cumulative effect of these Federal tax policy changes has resulted in the lowest Federal tax burden on farm income and investment in decades. The average tax rate has been reduced from 18 percent in 2000 to about 14 percent for 2005. Like all households, about one out of every three farm households now owe no Federal income tax, with some actually receiving a refundable child or earned income credit. Nearly all farm households have realized some tax savings as a result of the changing Federal tax policy environment.”

ERS says the most significant income tax law changes for the 2005 tax year are the increase in the Section 179 expensing, and the new deduction for producers, which was a result of the new World Trade Organization rules for exporters. The other point made by USDA’s Economic Research Service focuses on the new production deduction. This advantage to production agriculture will increase overtime, and was a result of changes in export laws to comply with rules of the World Trade Organization. Ag Economist George Patrick at Purdue, provides a good assessment of it in his recent publication on numerous new tax changes. Visit his report and scroll down to the section on “Domestic activities production deduction.” Since this is a new law for the 2005 tax year, ensure that your tax planner is aware of it.

Another good resource for farm operators and their tax planners is included in University of Missouri website on “Ag Tax Tidbits.” (http://agebb.missouri.edu/agtax/index.htm) While there are several valuable articles, visit the checklist, entitled, “2005 Year-End Tax Management for Farmers and Ranchers.” Make sure that you read only the federal tax information.

If a new piece of farm machinery appeared on your farm this year, an updated depreciation schedule would be the only result if it was from a trade in with a dealer. However Iowa State Ag economist Bill Edwards provides some good advice if you were involved with a purchase of equipment, and either preceded or followed by a private sale of your old equipment. That resource is in the April 2005 edition of Iowa State’s Ag Decision Marker newsletter (http://www.extension.iastate.edu/agdm/).

If you did not see an earlier posting on Farmgate about charitable contributions of commodities as a way to reduce your tax liability by reducing income and self employment tax, and increasing production deductions, then consult Gary Hoff’s summary (http://www.farmdoc.uiuc.edu/legal/articles/ALTBs/ALTB_04-08/ALTB_04-08.html). It would have to be completed by the end of the year for a farm operator.

Summary:

As you are called to action by the calendar to work on those farm tax issues, take consolation that you are not the only one having to do that, and there have been some recent friendly actions by Congress to lighten your load. If you are preparing your tax return by yourself, you are to be saluted for your initiative. If you are preparing your records to visit a tax preparer, take along this list of web-based resources to ensure your tax consultant is aware of the things you have been reading about, regarding Section 179, the Domestic Production Deduction, and also has access to your Extension-based farm tax specialists.

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Crop Profit Broadcast

The “Crop Profit” program on January 18 will be a Soybean Rust Special, “Soybean Rust- The 2005 Experience and 2006 Management”. The program will be broadcast at the Union County Agricultural Center in the Scarlet Room from 6:00 to 7:15 p.m. There will be two speakers:

Identification and Development of Soybean Rust from the Southern Experience - Dr Ed Sikora, Dept. of Plant Pathology, Auburn University

Ohio Soybean Rust Management for 2006- Dr Anne Dorrance, Dept. of Plant Pathology, Ohio State University

Both Dr. Ed Sikora and Dr. Dorrance are nationally known as two of the most knowledgeable individuals in the country on soybean rust.

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Pesticide Recertification Training

There will be three local meetings, although none will be in Union County this year. We rotate two meetings between Champaign, Logan, and Union Counties. This is the year that we do not host a meeting in Union County.

The two meetings will be on March 2nd. There will be a morning meeting on March 2nd at the Champaign County Extension Office. Registration will be at 8:30 a.m. The program will conclude at noon. The evening meeting will be at High Point Vocational School in Bellefontaine. The minimum training is 3 hours with training required in each area you are certified. One hour of core training is also required. Registration for this meeting will be at 6:00 p.m. The meeting will conclude at 9:30 p.m. All categories will be covered at these meetings. The registration fee for these meetings will be $15. This is for the recertification training. Note the description of the ODA charges below.

There will also be an additional meeting with Delaware County. This meeting will be at the Scioto Township Building just off Rt. 36 in Ostrander. The date for this meeting is not yet confirmed, although it will likely be at the end of March.

The Ohio Department of Agriculture charges $30 for your three-year renewal of your pesticide certification. This payment needs to be made to ODA by March 30, 2006. You can wait until you complete your training or send it now. Don’t forget it. If ODA doesn’t receive it by March 31, you will lose your certification and you will have to test again to be certified.

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Ag Is Still Important !!

Ohio’s Agronomic Industry is an important cog in the state economy. The industry produces farm gate receipts of $1.9 billion dollars on 55,000 farms producing corn, soybean and wheat on 8.4 million acres. Adding to row crop production is 1.2 million acres of hay valued at $118 million. The economic and social impact that this industry has on our state is tremendous as these dollars turn over in the economy.

We will face the challenges and opportunities of a new year together as we move into 2006. The CORN staff will be here to help you look at your options, put a value on input costs and the potential impact of pests to make the most out of your bottomline. We will make good use of research available from Ohio State University and other Midwest Universities to answer these questions.

In Union County, cash receipts from crops and livestock totaled $77,836,000 from 1010 farms. The crop production is on 249,000 acres of land. Union County ranks 19th in soybean production and 23rd in wheat. We also rank 12th in hogs and pigs and 6th in sheep production. All in all, you can see that agricultural is still very important to our local economy.

There will be many challenges in agricultural as we begin 2006. As you see from the above figures, the way our agricultural community faces new challenges and finds solutions is very important to our economy in Union County. Crop inputs will be key decisions for farmers as they produce crops and livestock. Ohio State University Extension will assist you in finding the latest information from the research completed by Ohio State University and other agricultural Universities in the Midwest. We want you to continue to be successful producers as we face the challenges of the new year.

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