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December 1, 2003
Leasing Papers
and Presentations
calculated as:
Added income (from using the building … alternative building) - Reduced income (which would be earned from … In this example, the added income is the higher expected price …
August 2, 2013
Agribusiness Papers
positive outlook for farm incomes.
So, if these positive … positive factors for farm incomes persist, then farmland rental … of these additional farm incomes.
Even if land rental rates …
February 5, 2009
Energy
Erosion
Biomass Contract Income, Terms Biomass ContractIncome, Terms (Company)(Company)
… Effects
–– ØØ Crop Income from soil moisture loss … soil moisture loss Crop Income from soil moisture loss …
August 18, 2016
General Session Presentations
Debt Considerations• Conclusions
Net Farm Income
$0
$20
$40
$60
$80
$100
$120
$140
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
2004 … The financial situation in the agricultural economy has changed considerably over the last 18 months• 2015 farm income in Kansas was the lowest since 1985• …
Breakout Sessions
look at the value based on income and current
interest rates … Land market is in the same situation
Ag Economy in Kansas
• Farm incomes have been high for 7 years (on
average, some exceptions)
• … Commodity prices have tumbled‐causing
considerable concern
• Livestock incomes have increased due to …
Breakout Sessions
will analyze the highest income farms in the state to
determine … to examine how net farm income per acre is
affected by
– … 4
Some background
Net Farm Income per Acre by Quintile
8/20/14 …
January 10, 2018
Agribusiness Papers
The Tax Reform and Jobs Act of 2017 could have significant implications for how agricultural cooperatives distribute
patronage back to their members. Under the tax reform plan, there are four key changes for cooperatives – (1)
elimination of the domestic production activities deduction or Section 199; (2) lower corporate tax rates; (3) lower
member taxes on qualified patronage distributions; and (4) a new tax deduction tentatively labeled Section 199A which
provides a deduction at the cooperative level as well as a deduction at the member level. Many cooperative directors,
managers, farmer‐owners, and policymakers are trying to figure out how all of this will impact taxes in rural America.
The purpose of this fact sheet is to examine the implications of the Tax Cuts and Jobs Act of 2017 for agricultural
cooperatives. A simulation model of a hypothetical grain marketing cooperative is applied to the previous tax situation
and the new tax plan. Results show that members of cooperatives will very likely benefit from the tax reform package.
Cooperative boards of directors also have the opportunity to re‐examine profit distribution decisions, both to maximize
member return and to manage the cooperative’s equity structure. Our analysis shows a slight advantage of distributing
equity in patronage in a nonqualified (not immediately taxable) form.
Brief Explanation of Tax Changes for Agricultural Cooperatives
Cooperative directors and managers are able to respond to changes in the tax code in unique ways. Under the Sub‐
Chapter T of the IRS code, cooperatives can deduct certain distributions of profits to their patrons. While certain
deductions have been removed under the new tax reform plan, other aspects should benefit the cooperative and its
members. The ability of cooperatives to manage their taxes via different distribution strategies could mitigate the
impact of the proposed tax reform changes.
The tax treatment of member‐based profits is important to this discussion. In order for a cooperative to maintain single
taxation, all member‐based profits must be allocated and distributed to the members in the form of patronage
distributions. Patronage distributions can be qualified or nonqualified. Qualified distributions are tax deductible to the
cooperative and taxable to the member. Cash patronage is one form of qualified distribution. The cooperative can also
distribute profits in the form of qualified equity. When profits are distributed in a combination of cash and qualified
equity the patron pays the tax on the entire amount received. The IRS requires cooperatives to pay at least 20% of the
entire qualified, patronage distribution in cash.
While qualified cash and equity patronage distributions have been the historical choice of agricultural cooperatives, the
firm can also distribute profits as nonqualified equity. For nonqualified distributions, the cooperative pays tax on the
profits in the current year and receives a deduction in a future year when the nonqualified equity is redeemed. When
the member receives the nonqualified equity in cash, they will then pay the tax. Both qualified and nonqualified equity
are eventually redeemed according to the cooperative’s equity retirement plan.
Cooperatives can also retain both member‐based and non‐member based profits as unallocated retained earnings.
These profits are taxed at the regular corporate rate, and the cooperative pays the tax. Cooperatives typically retain
non‐member profits as unallocated equity since those profits cannot be distributed as patronage. Retaining member
based profits as unallocated retained earnings does not achieve pass through taxation and, in the absence of a tax
credit, increases taxes at the cooperative level. Unallocated retained earnings are only realized by the member if the
cooperative is liquidated.
The domestic production activities deduction (DPAD) allowed cooperatives to offset some of their taxable income or
their members’ taxable …
February 17, 2022
Farm Profitability
by subtracting net farm
income from the value of farm production … used to determine net
farm income.
The one major difference … between KFMA reported net farm income and a farmer’s own …
April 15, 2022
Livestock Insurance
indemnities) that would replace the income that is lost due to a price … price risk management and income benefits of LRP, some preparation … time. Third, LRP provided income benefits in
most of the …
July 5, 2022
Ag Law Issues
not as an
exclusion from income. Thus, the redemption liability … not report these amounts as income for either year. The
IRS … been reported as “other income” as an
exception to the …