Nebraska Farm Bureau Announces New Health Plan

Nebraska Farm Bureau Announces New Health Plan

INSIGHTS

Nebraska Farm Bureau Announces New Health Plan

CURTIS THOMPSON, TAX MANAGER
In an effort to lower health costs within the agriculture industry, the Nebraska Farm Bureau has recently announced its new large group association health plan which aims to provide personalized healthcare coverage for farmers, ranchers, and agribusinesses. This offering will allow qualifying members to enroll in affordable healthcare coverage for themselves, their families and their employees.
There are to be three plan options, which will include a standard copay plan, a higher deductible plan, and a lower premium co-insurance plan. Enrollment opens on October 1st and will end December 1st of 2018.
Eligibility Requirements:
  • 50% of gross income must be in production agriculture or agribusiness
  • Must have less than 50 employees
  • Full-time employees are eligible
  • Must be a Nebraska Farm Bureau member since 7/1/2018 to qualify for 2019
  • Must become a Farm Bureau member by 7/1/2019 to qualify for 2020

 


ABOUT THE AUTHOR

402.463.8987

cthompson@lutz.us

LINKEDIN

747 N BURLINGTON AVE

SUITE 401

PO BOX 1317

HASTINGS, NE 68902

CURTIS THOMPSON + TAX MANAGER

Curtis Thompson is a Tax Manager at Lutz with over seven years of experience in public accounting. His experience includes tax planning, consulting and compliance for individuals and closely-held businesses, as well as governmental audits.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Amerian Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • BSBA, Peru State College, Peru, NE
COMMUNITY SERVICE
  • Hastings Give Day, Volunteer
  • Our Lady of Assumption Catholic Church, Member

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How Does the New Tax Law Affect Trades of Machinery and Equipment?

How Does the New Tax Law Affect Trades of Machinery and Equipment?

INSIGHTS

How Does the New Tax Law Affect Trades of Machinery and Equipment?

ADAM JACOBITZ, ACCOUNTING SHAREHOLDER

In 2017, Congress passed changes to tax laws that will significantly affect trades of agricultural machinery and equipment. Before you can fully understand how the new laws will affect your farming operation, you need to take a look at the past law.

 

Previous Laws Related to Capitalization of Boot on a Trade

Prior to 2018, when machinery or equipment was traded for like property, no gain or loss was recognized on the trade as the trade was considered to be a like-kind exchange. The boot on the trade plus any remaining basis of the traded asset would be capitalized and depreciated over the useful life of the asset or accelerated depreciation could be taken using bonus depreciation (if the asset was new) or Section 179. Let’s look at an example:

Farmer John trades a tractor for a new model. The old tractor has a fair market value (trade value) of $90,000 and the new tractor has a fair market value of $150,000. The old tractor has been fully depreciated and has zero remaining basis. Under the old tax law, Farmer John would depreciate the boot of $60,000 paid on the trade of the tractor. No gain would be recognized on the trade value of $90,000.

 

Capitalization of Traded Personal Property Under the New Tax Law

Under the new tax law, personal property is no longer eligible for like-kind exchange treatment. Therefore, when machinery or equipment is traded for like property, gain or loss will be recognized on the traded asset, and the full cost of the new asset will be depreciated over its useful life or accelerated depreciation can be taken using bonus depreciation (on new or used property) or Section 179. Let’s look at an example under the new tax law:

Assume the same facts as above.  In this situation, Farmer John will recognize a gain of $90,000 on the trade of the tractor. He will then depreciate the full $150,000 cost of the new tractor using regular depreciation, bonus depreciation, Section 179, or any combination thereof. With the ability to use bonus depreciation and Section 179, Farmer John will be able to reach the same outcome as he would of under the old tax law.

 

How Recent Changes Will Effect Personal Property Taxes

Under personal property tax law, the cost of the personal property asset listed on the federal depreciation schedule is used as the cost of the asset for personal property tax purposes. Under the old tax law, when there was a trade for like property, the boot on the trade was capitalized, and therefore, was the cost of the asset for personal property tax purposes. However, under the new tax law, the full cost of the asset will be reported on the federal depreciation schedule, and therefore, the full cost of the asset will be reported for personal property tax purposes. Let’s look at an example of the effect on personal property tax using the same facts as above:

Under the old tax law, Farmer John would have added the new tractor on his personal property tax return at a cost of $60,000 (the boot on the trade). However, under the new tax law, the new tractor will be capitalized at the full cost of $150,000. This will be the value used for personal property tax. As you can see, this has a negative effect by adding an additional $90,000 of value to the personal property tax return.

The Nebraska legislature did enact a change to the personal property tax laws in 2018 that effectively will continue to allow like-kind exchanges on personal property, but only for property expensed under Section 179 during 2018 or 2019.

“For purchases of depreciable personal property occurring on or after January 1, 2018, and before January 1, 2020, if there is an election to expense the depreciable property under Section 179 of the code and similar personal property is traded in as part of the payment for the newly acquired property, the Nebraska adjusted basis shall be the remaining net book value of the property traded in, plus the additional amount that was paid by the taxpayer for the newly acquired property.”

 

Now that the rules have changed, you may need to provide additional information to your tax preparer, including invoices from your machinery and equipment trades/purchases.  Changes in tax laws make it more important than ever for the owners/operators of ag-related businesses to communicate with their tax preparers.

ABOUT THE AUTHOR

402.463.8984

ajacobitz@lutz.us

ADAM JACOBITZ + TAX & AUDIT SHAREHOLDER

Adam Jacobitz is a Tax & Audit Shareholder at Lutz with over 14 years of tax and audit experience. He specializes in individual and business income taxation, housing industry audits, and consulting services.

AREAS OF FOCUS

 

AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Affordable Housing Association of Certified Public Accountants, Member
  • National Association of Housing & Redevelopment Officials - NE Chapter, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • BA in Accounting & Finance with a Minor in Economics, Doane College, Crete, NE
COMMUNITY SERVICE
  • Faith Lutheran Church, Treasurer
  • Leadership Hastings, Past Board Member and Treasurer
  • Hastings Symphony Orchestra, Past Board Member and Treasurer
  • Hastings Community Foundation, Board Member

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We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © 2018 Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

GRAND ISLAND + NORTH 

403 Lexington Circle

Grand Island, NE 68803

P: 308.384.9910

LINCOLN 

601 P Street, Suite 103

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND + SOUTH

2722 S Locust Street

Grand Island, NE 68801

P: 308.382.7850