With debate continuing over current plans for tax reform, an old nemesis for farmers is also being debated: The Estate Tax.
Farmers operate under a unique and challenging set of circumstances unlike those of any other industry. The Estate Tax is one of those factors that makes operating a farm, and passing it on to younger generations, such a challenge. Under the current tax code, and as farmers are land rich and cash poor, the Estate Tax may force a family to sell certain assets (land and equipment) to have cash in order to pay the Estate Tax bill so the next generation can continue the farm. Over time, this unfairly penalizes farmers for their hard work and puts unnecessary pressure on future generations.
In order to avoid the Estate Tax and other taxes, farmers should look into estate planning devices to prevent or lessen the burden that a death of a loved one or business partner may have on a farming operation. Such estate planning devices include trusts, life insurance, and gifting of assets to others.
In addition, farmers should consult an attorney and an accountant about using pass-through business entities, such as a Limited Liability Company, so that operations can continue uninterrupted and assets protected from liability and, potentially, Estate Taxes.
Painter & Associates, with attorneys that come from an agricultural background, understand the unique needs of farmers and their families. We can assist your family or business to preserve and pass on your farm, and all your hard work, to succeeding generations or business partners.
Also, Painter & Associates urges Congress to reduce the individual tax rate for those farmers, continue to allow farmers to use cash-accounting, keep step-up in basis on assets after death, immediate expensing, business interest expense deduction and decreases to the capital gains tax.