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Tax Tip - August 18th, 2008

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The Farm Bill contains some tax provisions

As you might expect, the recently enacted Food Conservation and Energy Act of 2008, also known as the Farm Bill, includes farm-related tax provisions. What's unexpected: You may be eligible for some benefits even if you're not a farmer or rancher.

Changes include the following:

  • An extension of the conservation easement deduction. As a general rule, charitable contributions of capital gain property such as land are limited to 20% of your adjusted gross income (AGI).

    Under a tax provision that expired December 31, 2007, farmers and ranchers who donated specific land rights for conservation purposes could take a deduction up to 100% of AGI. Other landowners could deduct up to 50% of AGI.

    The Farm Bill retroactively extends the increased benefit through 2009.
  • A uniform, shorter depreciation period of three years for all racehorses.
  • Modification of optional methods of computing self-employment income. If your self-employment income is below specified thresholds, using an optional method to compute self-employment tax can increase some credits as well as social security benefits.
  • Temporary disaster relief for Kansas tornado victims. Breaks include reduced limitations on casualty and theft losses, additional 50% bonus depreciation, increased Section 179 depreciation expensing limits, and penalty-free use of retirement funds.

The bill also amends certain like-kind exchange rules, provides energy related benefits and contains incentives for timber property. For details, please contact our office.
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