An ag attorney says farmers that plan to trade-in equipment this year could face a higher tax bill.
Joe Peiffer with Ag and Business Legal Strategies says provisions included in the Tax Cuts and Jobs Act changed trade-in values.
“For example, the quarter of a million dollars that you received on the trade-in is treated as though you sold the combine for a quarter of a million dollars,” he says. “If you’ve depreciated that combine and it has a zero-tax basis, you will now pay tax on the recaptured depreciation.”
He tells Brownfield as farmers are filing their taxes, correct documentation is critical.
“They’re going to need to make certain that they provided their accountant with all of the documents regarding any trade-ins they’ve done,” he says. “That way they can see what they were allowed as a trade in price on it and they see how much gain there actually is.”
Peiffer says he encourages farmers to be proactive and work closely with their accountants before making any major equipment decisions.
