Chuck Rabitz

Expiring Tax Laws May Affect Year End Farm Purchases!

Posted on December 13, 2012. Filed under: Chuck Rabitz |

Looking to beat the tax man and make some last minute equipment purchases for your farm before the year’s end?  You may now have some more incentive to do so. 

Eligible tax payers may elect to deduct the cost of certain property placed in service in a tax year rather than depreciate those costs over time. This is called “Bonus Deprecation.”

For tax year beginning January 1, 2012 through December 31, 2012, bonus deprecation is at 50% with the remaining 50% being deprecated using normal Section 179 depreciation rules.

As we hear comments about the Fiscal Cliff and the economy, Congress ultimately makes the decisions on tax laws. Just like the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” that allowed 100% deprecation during tax year 2010. Currently, there is no provision to expand tax laws for bonus depreciation for property place in service after December 31, 2012.

The total amount of deprecation you can claim is also scheduled to drop and the Section 179 amount for calendar year 2012 is $139,000 with a $560,000 purchase limitation.  As the law is set to expire at year end, the Section 179 depreciation limit drops or reverts back to $25,000 with a $200,000 purchase limitation.

Will the expiring tax laws be enough to get farmers to buy before year end?  It may jumpstart some equipment purchases, especially if a farmer is sitting on cash and needs an incentive to spend it.

 Please consult your tax preparer before buying any equipment.

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Farm Business Planning

Posted on April 17, 2012. Filed under: Chuck Rabitz |

Farm business planning may not be something high on everyone’s priority list, but all family owned businesses must seriously think about planning and writing things down.

As we design a farm management structure we also must think about positioning or transitioning the business for the future.  There is a difference between letting something happen and making informed decisions.

Form a Business Plan

The first step of any successful farm is a business plan; this includes mission statements and core values of the operation. Detailed planning will include dividing responsibilities, setting policies, and communicating. There also must be some type of system in place to measure performance. Remember, for this to work everything needs to be written down.

Set Goals

Goals of the farm operation should include all aspects of the business including personal goals.  Owners and employees should all have written job descriptions. Farming today is even more complicated and it is a really good idea to spell things out, things like compensation packages. Many farms today have many partners and even investors. All parties involved must have similar goals in mind.

Farms today are small businesses and we don’t necessarily think things like Standard Operating Procedures (SOP’s) apply but they do.  For example written safety protocols for the farm are now inspected by OSHA.

Like any business, working capital, debt to asset ratios and cost of production are important with good record keeping.

Working in a family business can be very rewarding, but there could be consequences when we don’t do things well. There are many professionals out there to help you, including your banker.

Plan …..To ensure success.

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FSA Lending

Posted on June 3, 2011. Filed under: Chuck Rabitz |

There’s an old cliché that farmers are asset rich and cash poor. Denmark State Bank understands the needs of our agricultural community and is proud to participate with FSA. FSA stands for Farm Service Agency and it offers benefits to both farm customers and lending institutions in a variety of programs.  These programs allow the greatest flexibility for agriculture customers by offering lower monthly payments, rates and provide a guarantee on a portion of the total loan, which in turn reduces risk to a lending institution. 

FSA programs are ideal for farmers looking to expand their farm operation, or existing debt. One of the most popular FSA programs for young farmers is the Beginning Farmer program. This program is utilized by farmers looking to purchase their first farm. A lender finances 50% with a 95% guarantee and 30 year terms, FSA finances 45% with 20 year terms and the beginning farmer needs a 5% cash down payment. This program allows young farmers the opportunity to get into farming without the large cash requirement many financial institutions would otherwise require. 

Denmark State Bank is proud to participate with FSA and partners with many of their programs and services. We can help both existing customers and new customers meet their financial needs.



Equal Housing Lender

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