We have received our shipment of 2008 Farmer’s Tax Guides. These cover all issues relative to farm income tax calculation.
Included in the publication are topics on qualifying income, deductible expenses, prepaid expenses, business use of your home, non-deductible expenses, basis of assets, depreciation methods, section 179 expense deduction, hedging, standard mileage rates, installment sales, self-employment taxes and much more.
We will be glad to mail one of these out if you are not coming by the Extension office. It is also on the web. Just do a “Google” search on “Farmer’s Tax Guide.”
Farm Machinery Repair Costs
When the decision is being considered on whether or not to update equipment, one of the more important factors is repair cost estimates in the future for that particular piece of equipment. Obviously, the more accurate our estimate of upcoming repairs, the better decision we can make relative to purchasing or leasing.
In the absence of any better methods, the ASAE has a table which gives a ballpark estimate of repairs in the future. It is given as a percentage of list price and is based upon (1) annual hours and (2) years of life of the equipment.
For example, a 2 wd tractor being used 400 hours per year and having an estimated life of 15 years will have a 25 percent of list price accumulated total repair cost, according to the ASAE data. The same tractor being run 800 hours per year with a 10 year life will have a 44 percent repair accumulation over its lifetime.
A tractor costing $100,000 and which runs 800 hours per year with a 10 year life, on average, will total $44,000 in repairs.
A $200,000 list price combine running 100 hours per year with a 10 year life will have a total 10 year repair bill of only $4,000.
If running 200 hours per year and a 15 year life, the total jumps to $40,000.
Just what kind of TLC a producer applies to tractors, combines, drills, swathers and all other pieces of equipment makes a significant difference in repair costs. So, we can fudge these numbers around somewhat if we know the history of the item being considered or the track record of the person operating the equipment. Some people seem to have a God-given knack for accumulating repair bills.
If you would like to look at these ASAE tables, just give me a call. Data is available for most types of equipment and includes both powered equipment and equipment pulled through the field, such as a chisel.
Farm Forum on Homeland Security
Our annual McPherson Chamber of Commerce “Farm Forum” will be held Thursday, Jan. 8 at 6:30 p.m. at the 4-H Building. Our topic this year is “The Impact of Homeland Security on Local Agriculture.”
Panel members will include Sen. Jay Emler, Dan Hay from the Kansas Homeland Security Department and Dillard Webster, our county’s emergency management director.
Reservations need to be made at the Chamber office by Tuesday, Jan. 6. Cost is only $5 plus a food item which will be donated to the McPherson Food Bank