Date of this Version
Cornhusker Economics (September 2011)
Many things in agriculture move fast. Technology is growing and changing rapidly. Input dealers are knocking on your doors earlier and earlier each year. This summer it seemed like many producers were dealing with marketing their 2010 crop, growing their 2011 crop and making input decisions on their 2012 crop. Each of these things complicates the tax planning each year. Add that to the record high profitability many agricultural producers have seen over the past five years, and one of the most common comments I’m hearing is “I think I’m going to have a tax problem this year.” You’re not alone, but it creates a need for tax planning to be more than something you do two weeks before the end of the year.
Ten years ago, the income patterns for many farmers seemed to be one good year followed by one not so good year, followed by another good year. Somewhere along the past decade we lost that pattern. According to the accrual net farm income numbers we generate each year, we have seen five straight years of record high incomes at levels that were unheard of before this. While this has been great for the economies of many agriculturally based states and for the producers themselves, it does bring us right back to having a tax problem.