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January 15, 2013
risk … Drought Implications, and
Risk Management Overview
January … Management Overview
January 15, 2013
Auburn, KS
Glynn Tonsor
Dept …
January 31, 2013
profitability … impact compared to 2011
• 2013 market will reflect:
– … http://www.agmanager.info/livestock/budgets/production/beef/Cow-
calf_EnterpriseAnalysis(Nov2012).pdf
3
As of: 1/30/13’
http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/default.asp
ESTIMATED …
December 11, 2012
profitability … impact compared to 2011
– 2013 market will reflect tight … over cash costs
– 2012 (2013) estimates have fell over …
February 6, 2017
Cost
2015
$312
$225
$180
2014
$322
$229
$172
2013
$308
$224
$182
2012
$325
$202
$183
2011
$281
$192
$158
2010
$268
$176
$148
2009
$267
$173
$160
2008
$265
$167
$153
2007
$231
$145
$117
2006
$191
$125
$98
2005
$188
$118
$95
Kansas … Probability of Default
Change in Risk Rating 2014 to 2015
Repayment …
October 15, 2018
KFMA Newsletters
The TCJA implements several significant—even structural—changes to the tax code. Included among these are the
elimination of personal exemptions, the substantial increase (near‐doubling) of standard deductions, an expansion of
the child tax credit (in amount, refundable portion, and income limits), creation of a new 20% “Qualified Business
Income” (QBI) deduction, and extensive changes in depreciation rules for farmers. Add in tax rate changes and many
more modifications not mentioned here and you can see why TCJA is being described as the most sweeping tax bill
passed by Congress in the last 30 years. (For a detailed dissection of TCJA, see “Tax Cuts and Jobs Act” by Mark Dikeman
in the March 2018 KFMA Newsletter.)
Before discussing the usage of some of the tools TCJA gives us to manage tax, a brief review of the concept of tax
management would be helpful. Put concisely, tax management should attempt to remove the upper income from very
good years, raise the troughs of very poor years, and align taxable income levels from year to year. Recall that not only
income tax should be managed, but also self‐employment tax (Social Security and Medicare taxes for self‐employed
individuals). Also remember that Social Security benefits are based upon the level of income on which self‐employment
taxes are paid over the working life of the individual. The 35 highest earning years (after accounting for inflation) are
used to determine the Social Security retirement‐related benefit. Intuitively, managing taxes in such a manner as to
simply reduce the net income reported on the tax return each year—and therefore the taxes paid—to as low a value as
possible is not an efficient tax management method. Net return after taxes is a much more important measure than
taxes paid. Also, as returns to agriculture are by nature volatile over time, it is vital to implement tax management with
a multi‐year mindset. That is, recognize that decisions made regarding the current income tax year directly affect future
years as well (and not just the following year, either). Tax management should be implemented with an eye toward
using the tax attributes you have available in the most efficient manner possible over multiple years. Manage your tax
tools and attributes (deductions, deferrals, flexible depreciation rules, prepays, etc.) like you would your farm assets.
Use them efficiently, do not waste them, and definitely do not allow the process of tax management to alter the
enterprises on your farm or ranch, or how you get things done.
In a lower income year, techniques employed to manage taxes are used very differently than they are in high income
years. Be prepared for a different mindset concerning tax management this year if you are working through a low
income 2018. Instead of advancing expenses into the current year, deferring income into the following year, or
aggressively electing to deduct additional depreciation from machinery purchases via Section 179, you may be
http://www.agmanager.info/kfma/ September 2018 E‐newsletter 3
employing the opposite techniques in order to prop up this year’s taxable income to a level similar to your recent past
levels. In low income years, avoiding an overall loss of the tax return (a net operating loss, or NOL) is nearly always
advisable, if possible. It is true that NOL’s can be carried forward and utilized in future years, but in doing so some
deductions are often lost and the NOL does not reduce any self‐employment tax in the years to which it is carried. Also,
attempting to fill the lower income tax brackets that you have traditionally filled is often beneficial. Remember, you will
not receive a wider bottom tax bracket next year just because you didn’t fill the current year’s bottom bracket.
One of the areas of significant change brought on by TCJA is that of depreciation. These changes result in most farm
machinery being depreciated in more of a frontloaded manner and sometimes even over a shorter depreciable life. (See
“New Depreciation Rules” by Amy Boline and Chelsea Fullerton in this issue of the KFMA newsletter for a complete
breakdown of these depreciation changes.) In a low‐income year, it is helpful to review significant repairs made and
supplies purchased to determine if any of these expenses should be capitalized instead of immediately deducted as
repairs or supplies. Doing so gives you options. You can accelerate all or a portion of the purchase via Section 179 if the
expense is necessary in the end to manage your tax situation, but you can instead leave the item on your depreciation
schedule, effectively pushing deduc …
December 1, 2015
KFMA Newsletters
As I write this, there are piles of grain on the ground in many areas of the state, market prices for grain below the cost of
production, uncertainty in the tax laws as we plan for the end of the year, reduced working capital and eroding debt
repayment capacity for many farms... all part of the current agriculture management environment. These are also
reminders to each of us of the importance of careful planning and consideration as management decisions are made.
Those of us working within the KFMA program and in the Agricultural Economics Department greatly appreciate the
efforts of those working on the farms and ranches of Kansas. We are thankful for the opportunity to provide farm
management information to farm decision makers through this newsletter and through delivery of the KFMA Program.
The KFMA motto is “Building Strong Relationships…Producing Excellence” and we desire to use this newsletter as a way
of building our relationship with you and to provide you with information that helps you achieve excellence. The KFMA
E‐Newsletter is sent quarterly throughout the year. This issue provides information on farm profitability, measuring
financial health, and the importance of understanding your farm’s current financial position and debt repayment ability.
Finally, we provide you with some guidance toward year‐end tax planning and management.
Further information can be found on the extension agricultural economics website at www.agmanager.info and the
KFMA website at www.agmanager.info/kfma. I would welcome any comments that you feel will be helpful for the KFMA
program to excel in our work with the farm families of Kansas as we seek to help you know your numbers, use your
numbers, and reach your goals. Till next time…
Kevin
…
May 9, 2013
1998 2001 2004 2007 2010 2013
Mil. Head
C-N-38
02/04/13
+1.9 … Sep
Percent
Avg.
2007-
11
2012
2013
G-NP-30
05/06/13
Livestock … Sep
Percent
Avg.
2007-
11
2012
2013
G-NP-32
05/06/13
Livestock …
March 26, 2013
10 years?
Overarching 2013 Economic Outlook
• Certain … Overview:
Cow-Calf Sector
• 2013 market will reflect:
– … http://www.agmanager.info/livestock/budgets/production/beef/Cow-
calf_EnterpriseAnalysis(Nov2012).pdf
– Direct implication …
March 1, 2013
Term Prospective
March 1, 2013
Ted Schroeder & Glynn Tonsor
Agricultural … Economics
1
Overarching 2013 Economic Outlook
• Certain … Overview:
Cow-Calf Sector
• 2013 market will reflect:
– …
September 27, 2012
necessarily seeking to maximize profits as core goal …
• Returns … over cash costs
– 2012 (2013) estimates have fell over … AgManager
13
http://www.agmanager.info/livestock/budgets/production/beef/KSU_FactSheet_
ValueOfGainForecastingApproaches.pdf
14http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/VOG.asp
15http://www.agmanager.info/livestock/marketing/graphs/cattle/prices/VOG.asp
Historical …