It could be yet another sign that the good times are over.
Grain in 2013 and aren鈥檛 expected to reach their former heights this year. And last year also marks, at least for now, the end of the half-million-dollar tax write-off many farmers have enjoyed. Under of the tax code, business owners鈥攊ncluding farmers鈥攃ould claim the full cost of new equipment during the year they bought it and began using it.
鈥淎 lot of farmers will buy high-ticket items knowing that they can get a substantial tax write-off,鈥� said Roger McEowen, director of the at Iowa State University.
But as they pay their taxes for this year鈥檚 March 3 deadline (normally, it鈥檚 March 1 for farmers, but that鈥檚 a Saturday this year), farmers may be saying good-bye to that provision. As it stands right now, McEowen says, the generosity in the tax code is gone.
鈥淚t came in, it was ramped up over a number of years, then extended to go through 2013,鈥� McEowen said, 鈥渁nd now we鈥檝e reverted back to the law as it was over a decade ago with no inflation adjustment. For 2014, it鈥檚 $25,000.鈥�
But McEowen says by the end of this year, he expects a retroactive adjustment.
鈥淭hose in the tax profession, we鈥檙e all pretty certain that we鈥檙e going to see something reinstated. What we don鈥檛 know is the timing of it,鈥� he said. His hunch? Congress may not do anything with this until after the November midterm elections.
鈥淚t could be December when we see something retroactive to the beginning of the year,鈥� McEowen said, 鈥渨hich is horrible from a planning standpoint because you need to know what the law is so you can plan around that.鈥�
But McEowen says in the end, Congress will likely settle on something significantly higher than $25,000, though perhaps not as high as $500,000. In the meantime, after for Congress to decide on agricultural policy, farmers are now left waiting for tax policy.
鈥淭his has been nightmarish,鈥� McEowen said. 鈥淚t is impossible to do any long-range planning.鈥�
Indeed, McEowen says tax lawyers can鈥檛 even advise clients on short and medium-term tax planning because they don鈥檛 know what the laws are going to be.
鈥淭hat鈥檚 what鈥檚 incredibly frustrating,鈥� he said.
Of course, with lower crop prices, farmers may be less inclined to make major equipment purchases this year anyway, sparing them some of the pain of lower write-offs.
