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Financial Conversations with Fitz #75 - Can't Believe It's August - 08/02/2010

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Corn and beans are growing.  1687 degree days.    About the same as last year.   Over half way there…...  A  Great week of RAGBRAI last week.   North Iowa did themselves well.   Had a great Hancock Fair.   Super job by the board and the 4-H youth on an awesome performance.   Lots of people enjoyed the show.  Dow will probably open strong this morning….Earnings are improving—Grain, what a ride it has been….Last week I mentioned, Don’t let these increases go without some action.   Market will probably open much higher  today.   Traders go from flood to drought in two days.  Worried about our high temperatures.. Lots of corn out there at least in northern Iowa and southern Minnesota…..If you do any traveling it looks like a greenhouse both east, west and north from here except for the ponds.  This is the month to definitely empty the bins.   Regionally most of the grain is in town.   Don’t wait too long that the elevators won’t be able to take your corn when you want to deliver it.

As long as we are on the subject of selling grain or holding it I had mentioned a couple of broadcasts back about “selling your grain tax free”.   I have had several comments and questions of what the heck are you talking about Paul.   You can’t sell your grain “tax free”.   Here is the scene….I have spent 11 years owning my own tax firm and the last 30 working with farmers with their cash flows.   When I see a tax return that the individual producer shows a tax loss because he didn’t sell his grain because of pricing or size of pending crop.   Then he sells that same grain several years later when he does show a profit.   So he pays tax at about a 26% rate with federal and state.   The government allows us as taxpayers to earn a certain amount without paying taxes in the form of personal exemption ($3650 in 2009) and a standard deduction of $12,500 if married and filing jointly.   Let’s assume you have 4 personal exemptions and take the standard.   That adds up to $27,100 in income you can earn without having any tax due.   That is 7,677 bushels you can sell tax free based on todays price.   Another plus is that if you sell that same amount of bushels and pay regular taxes on the grain it will cost you $7,704 or about 2,000 bushels in income tax for federal and state.   If you like to compare figures come in to see us at TSB in our tax department or with one of our loan officers to see what I mean.   Either way, be safe when you are emptying your bins this month.   Watch for those middle sections that are stacked up because of moisture during their storage.   Be sure to watch for an ISU Rental meeting in your area this month.   You can just google ISU Extension to see one in your immediate area.  The month goes fast enough without having your tenant/landlord situation up in the air.
Hope you had a chance to volunteer for your church or community this last week.

Where to go for help …..Local banker

Remember that you should deal with people in community banks and organizations that when they put something together for you that they will be sitting with them at ball games, church or community events.  So, if in doubt give us a call.