Financial Conversations with Fitz #44 - Time For Some Tax Planning - 12/15/2009
Happy December! Wow! I think winter is here. Official isn’t until December 21st. About 11.5 inches of snow in North Iowa. My shovel still works….. Worked on bird waterers and feeders on Saturday. Grain prices still quite volatile. Can still sell for about $3.87 cash in this area. ..Keep close track! Not sure how these prices are going to work for next year……I don’t see a lot of carry in the market into March or May. Some brokers think it is worth it. Be sure to consider interest and condition of grain. Have been to several meeting being held on forecasts and pricing for 2010. Will be talking about cash flows for crops later this month.
I want to review several of our tax comments. I trust that most of you have been in to see your tax preparer. We had several questions on FSA contracts and tax forms. If you were listed with FSA as an individual unit along with your spouse for benefits, you will need to file as an individual operator with a separate schedule F or on a partnership return. Check with you tax person if you think it applies. You can still file a joint return but just need to do your own Schedule SE for social security. A large audit item with IRS. With the higher year for income this year as we mentioned compared to what we think next year will be you may want to also look at a couple of items. This depends on how much grain you carried over from 2008 into 2009. How much corn did you sell in the 4.50 to 5.00 range? Another area might be in itemized deductions. Maximize them this year and use standard exemption next year. Most people don’t have enough to itemize unless they can for state. Are your FSA payments going into the right operating account in your bank. It would be good for you to check on which account you want them to go in the bank—personal vs business account. Did you have any ethanol stock that needs looked at whether to sell at a loss or kept? Be sure you get in to see what your next three months looks like with us and your LOC for next year. You may need to purchase some supplies at the last moment after you have been to see your tax planner. Remember if you have a loss in your operation and still holding grain, selling 3.80 grain tax free is a good price vs. selling it for 4.50 taxable is actually 2.70.
If you haven’t completed your leases, check on language if you changed the character of leases that are flexible.
Don’t forget to check out our new office in Thompson this week. A big party on Wednesday Dec 16th from 9:00 to 4:00.
Remember that you should deal with people in community banks and organizations. When you work with them, you know that you will also see them sitting with you at ball games, church or community events. So, if in doubt give us a call.