Rural Reflections: Tax extenders would be welcome gift
As grain harvest nears completion, farmers are planning for next year. Soil tests are being processed, seed corn choices are being reviewed and farm meetings are sharing information necessary for next year. Grain prices have crept up a bit. The balance between the inputs and returns is precarious.
Wouldn’t it be nice to know what prices will be in the spring and when the best time to sell grain will be? That’s not going to happen, but there are some other things on the wish lists this year as we get ready for Thanksgiving and the end of the year.
For all of us, we extend our thanks for the bounty given to us. Those of us who are older know conditions can be vastly different. Our state has experienced drought conditions in the past, so we know what that feels like. Some states like California, which has the highest production of agricultural products, continue to be plagued by drought. Farmers are limited on the amount of water they can draw for irrigation. And in most of those areas, if you don’t irrigate, there is no crop.
The drought monitor continues to show that other states, such as Texas and Oklahoma, are still being affected by drought. While the affected areas have shrunk in the past few years, lack of this vital element can be devastating. This is especially true if you try to make a living from the land.
One of our friends does custom combining in Oklahoma. Wheat yields there were 10 to 12 bushels per acre, and this wasn’t the first year for such yields. While October should have been when planting took place, tractors didn’t roll across the field. Putting seed into dust with no hope of rain seems to be a useless proposition. We pray for those who suffer from unpredictable disasters in their operations. And we hope that this area will be spared from similar situations.
As farmers put away equipment and review this year’s bottom line, we wonder how lower commodity prices will play against input costs for the next year. Watching those costs will help to make things pencil out at the end of the year. Prepaying expenses has become one way to manage finances. Each operation carefully considers ways to make sound business decisions during the year.
In our agricultural business, some are looking for a year-end gift from the lame-duck Congress. There is talk that maybe the legislative body will provide an extension of higher section 179 expensing levels and other “tax extenders.” That would allow farmers to take the full depreciation deduction of an item that meets certain specifications in the current tax year. In most cases, the provisions were needed machinery purchases. The maximum deduction would be $500,000. While Congress extended the provisions last January, the deduction, without any further action, would be $25,000 for 2014 unless Congress takes further action.
A number of agricultural groups have urged both houses to act on expired tax policies before the end of the year. The group feels this is a vital issue not just for agriculture, but for all businesses.
Producers rely on a stable and predictable tax code in order to plan purchases, make investments and grow their business. It’s getting close to the eleventh hour for tax planning. It is incredibly important that Congress pass these extenders as quickly as possible.
Happy Thanksgiving to all of our readers!