American farmers freaking/worried

[hog88]

If that's the tax plan, it's literally the easiest tax to work around. Don't get me wrong, I think the plan is idiotic. But if it is implemented, farmers have pre existing structure which will prevent both sale to heirs or inheritance.

The plan is idiotic and hurts the middle class more than anyone.

 

[BigOrangeTrain]

That is false. It's John Malone.

Nope. It’s Bill Gates.

Bill Gates Is America's Largest Farmland Owner, Announces The Land Report

Why Bill Gates Is the Biggest Owner of Farmland

America’s Biggest Owner Of Farmland Is Now Bill Gates

Bill Gates: America’s Top Farmland Owner | The Land Report

 

[McDad]

The plan is idiotic and hurts the middle class more than anyone.

It only hurts if they do not take appropriate action to counter the plan.

Tax theory and tax application over the years prove people will tax reasonable steps to avoid, delay, or defer taxes.

Farmers will do the same. They shouldn't be forced to...but if it comes to a head, they will enact strategies which mitigate their exposure to taxation.

 

[hog88]

Nope. It’s Bill Gates.

Bill Gates Is America's Largest Farmland Owner, Announces The Land Report

Why Bill Gates Is the Biggest Owner of Farmland

America’s Biggest Owner Of Farmland Is Now Bill Gates

Bill Gates: America’s Top Farmland Owner | The Land Report

This has already been covered.

 

[Orange defense]

Are you prepared to take up arms? My family owns a farm in middle Tennessee. The radical left has already tried to push Zimbabwe, South Africa-esque farm 'reforms' to give land to undeserving minorities in the name of anti-racism. What makes you think they won't start taking land from people to accomplish this?

I am sure your family won’t go down without a fight. You going to join them? Come on!

 

[ButchPlz]

If that's the tax plan, it's literally the easiest tax to work around. Don't get me wrong, I think the plan is idiotic. But if it is implemented, farmers have pre existing structure which will prevent both sale to heirs or inheritance.

My family did background work to get around it anticipating something like this would happen- when my granddad passed last year (granted this was not in effect) he didn't own any of the farm. It took several years to transition the farm to his sons.

The problem is we're not sure if/how we'll transition it to us (me and my cousins) or the other brothers. They each own a quarter share, and as it stands now, the shares just split among the rest if one of the brothers dies. I would assume they'd get taxed on that split. How do you avoid that? Sell off chunks of the farm to pay the bill?

 

[hog88]

It only hurts if they do not take appropriate action to counter the plan.

Tax theory and tax application over the years prove people will tax reasonable steps to avoid, delay, or defer taxes.

Farmers will do the same. They shouldn't be forced to...but if it comes to a head, they will enact strategies which mitigate their exposure to taxation.

Yes. We as a family have already taken the steps to ensure our farm can continue after our parents pass. Many will incorporate and several will just be screwed.

It will really hurt normal middle class people who hadn't had a chance to prepare (or just didn't) when they inherit mom/dads paid for house that they purchased 40 years ago.

 

[McDad]

My family did background work to get around it anticipating something like this would happen- when my granddad passed last year (granted this was not in effect) he didn't own any of the farm. It took several years to transition the farm to his sons.

The problem is we're not sure if/how we'll transition it to us (me and my cousins) or the other brothers. They each own a quarter share, and as it stands now, the shares just split among the rest if one of the brothers dies. I would assume they'd get taxed on that split. How do you avoid that? Sell off chunks of the farm to pay the bill?

Assuming a farm can incorporate, simply create a corporate structure to the business. Corporations are owned by shareholders. Corporations can be bought and sold. But they can also exist in perpetuity with a person (or group of people) directing the operations. Only when the shares are sold, would cap gains apply and only to those specific shares. You are allowed to gift $10,000 per year to family members without tax. So, one family can gift $10,000 to others and over the course of several years or decades transfer the shares completely without tax.

 

[hog88]

My family did background work to get around it anticipating something like this would happen- when my granddad passed last year (granted this was not in effect) he didn't own any of the farm. It took several years to transition the farm to his sons.

The problem is we're not sure if/how we'll transition it to us (me and my cousins) or the other brothers. They each own a quarter share, and as it stands now, the shares just split among the rest if one of the brothers dies. I would assume they'd get taxed on that split. How do you avoid that? Sell off chunks of the farm to pay the bill?

This is what will be the killer for family farms that don't set up the transition correctly. If they have to sell off a portion to pay an inheritance tax Biden's tax plan will eat up that money.

 

[McDad]

Yes. We as a family have already taken the steps to ensure our farm can continue after our parents pass. Many will incorporate and several will just be screwed.

It will really hurt normal middle class people who hadn't had a chance to prepare (or just didn't) when they inherit mom/dads paid for house that they purchased 40 years ago.

It will hurt some.

It will not be an apocalyptic event.

 

[hog88]

Assuming a farm can incorporate, simply create a corporate structure to the business. Corporations are owned by shareholders. Corporations can be bought and sold. But they can also exist in perpetuity with a person (or group of people) directing the operations. Only when the shares are sold, would cap gains apply and only to those specific shares. You are allowed to gift $10,000 per year to family members without tax. So, one family can gift $10,000 to others and over the course of several years or decades transfer the shares completely without tax.

There are some disadvantages to incorporating the family farm. I'm not up to speed on that subject but my dad and brother have looked into it and decided it wasn't a good idea in our case.

 

[n_huffhines]

If that's the tax plan, it's literally the easiest tax to work around. Don't get me wrong, I think the plan is idiotic. But if it is implemented, farmers have pre existing structure which will prevent both sale to heirs or inheritance.

Yeah, I have no idea what I'm talking about with land inheritance tax but my first inclination was that there has to be a workaround for this. The land could be owned by an LLC or something.

If not, the Duttons are ****ed!

 

[McDad]

There are some disadvantages to incorporating the family farm. I'm not up to speed on that subject but my dad and brother have looked into it and decided it wasn't a good idea in our case.

Understood. My business (1 man entity) is incorporated. It is a hassle.

I suspect what doesn't make sense now may make sense if/when the idiotic tax is applied.

 

[hog88]

It will hurt some.

It will not be an apocalyptic event.

No it won't be an apocalyptic event it's just another domino that leads to it.

 

[McDad]

Yeah, I have no idea what I'm talking about with land inheritance tax but my first inclination was that there has to be a workaround for this. The land could be owned by an LLC or something.

LLCs are legal entities; not IRS entities.

But your intuition is spot on. There is ALWAYS a workaround to real asset taxation. The people passing the tax law own land, farms, etc. They always give themselves a back door.

 

[hog88]

Understood. My business (1 man entity) is incorporated. It is a hassle.

I suspect what doesn't make sense now may make sense if/when the idiotic tax is applied.

Currently my parents own little of the farm, it's herd and machinery. Me and my brothers have "bought" them out.

 

[McDad]

Currently my parents own little of the farm, it's herd and machinery. Me and my brothers have "bought" them out.

You know, I just had a thought. There exists in real estate, 1031 swaps which defer cap gains taxes indefinitely. There are also firms which specialize in facilitating those swaps. I bet there will be a way to 1031 swap a farm or portions of a farm between family members and thus defer the taxes.

 

[hog88]

You know, I just had a thought. There exists in real estate, 1031 swaps which defer cap gains taxes indefinitely. There are also firms which specialize in facilitating those swaps. I bet there will be a way to 1031 swap a farm or portions of a farm between family members and thus defer the taxes.

Possibly, it would be a bitch trying to stay within all the rules.

 

[McDad]

Possibly, it would be a bitch trying to stay within all the rules.

Tax strategies tend to be a birch.

 

[LouderVol]

Tax strategies tend to be a birch.

It's almost like the politicians dont want normal people to have tax breaks.

 

[McDad]

It's almost like the politicians dont want normal people to have tax breaks.

I get the tongue in cheekiness of your post.

But, I also think there is a lot of truth to it. Those who get hosed on taxes are young people who are just starting their career and have little to deduct or credit. And those who are not savvy enough (or have enough assets to justify taking action) to implement more sophisticated strategies. In this way, our tax system which is structured politically to address regressive taxation is actually very regressive.

 

[Rasputin_Vol]

You will still be fed, the difference is that instead of your food coming from family farms it will come from corporate owned farms that also control processing and distribution. So prices go up and they will have the ability to use food as a weapon.

Or, time to start homesteading. Seriously...

I'm trying to move in that direction right now.

 

[Rasputin_Vol]

Are you prepared to take up arms? My family owns a farm in middle Tennessee. The radical left has already tried to push Zimbabwe, South Africa-esque farm 'reforms' to give land to undeserving minorities in the name of anti-racism. What makes you think they won't start taking land from people to accomplish this?

Link?

 

[hog88]

It's almost like the politicians dont want normal people to have tax breaks.

They don’t want normal people to build wealth. A real independent middle class has no need for government “help”.

 

[Rasputin_Vol]

They don’t want normal people to build wealth. A real independent middle class has no need for government “help”.

I just read the article... oh, this Biden guy... yeah, he's trying to kill the middle class. They don't want people passing down wealth to the next generation. Wow....