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Consultant: Tax deferral might not be best option
The drought is raising some familiar questions about the deferability of crop insurance proceeds, as well as tax deferrals available for drought-forced sales of livestock.
Anthony Barrett is a farm financial consultant with Nebraska Farm Business Inc. He says tax deferral is not always the best option.
“Just because there’s an election to defer income, everybody thinks that’s great to defer it and not pay taxes on it until you really have to,” Barrett says. “But you really have to look at your consequences and see if that is acceptable for you to go ahead and defer that.
“Sometimes you might have low income and it’s going to take that income to not show a loss on your tax return that year,” he says. “Showing a net operating loss on a return, you’re losing out on some deductions, some credits possibly, and things like that.
“Also you might be giving up cheap capital gains rates for something that’s going to offset some regular income tax and self-employed tax in the future,” Barrett continues. “So you might end up paying more tax in the long run.”
Barrett was one of the presenters on a recent Nebraska Farm Bureau drought webinar.
AUDIO: Anthony Barrett (3:47 MP3)
2012-08-07 17:10:09
Source: http://brownfieldagnews.com/2012/08/07/consultant-tax-deferral-might-not-be-best-option/
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