You are here
Buckeye Dairy News : Volume 1 Issue 1
Not the state lottery
but yes, you are getting something from the state! OSU has some of the most knowledgeable researchers in dairy science and one of the top extension systems in the nation. We thought that it was time for Ohioans to learn about it.
Buckeye Dairy News will be published 12 times a year around the 15th of the month. We intend to keep its content factual, informative and to the point. We will feature monthly columns on milk, grain, hay and culled cows pricing. Some of the best brains with two legs will explain new knowledge acquired through research and will provide you with tips to help you in all dimensions of modern dairy herd management. This months invited contributions deal with forage inventory management, pasture, farm measures of competitiveness, and a great update on the ugly tax law. Next months feature article by Dr. Bernie Erven should be a classic. We are bullish on the Ohio dairy industry, so our tone will be upbeat, positive, yet challenging.
This first issue is not perfect, but it is out! We will improve with time. The next issue, however, will not come automatically to you. There are three ways that you can keep receiving this newsletter. (1) Fill out the form on page 3 and return it with a $10 check. Each issue will cost you less than a slice of pizza at the county fair (2) Contact your county extension office. The cost will vary depending on the county. (3) Buy it in bulk and save! Group rates (>10) are available and we are only a phone call away.
Sit down, learn and enjoy!
Dairy Extension Specialist, Editor
Six things to do to reduce income tax pains.
District Specialist, Farm Management
In planning for the upcoming tax season, farm business owners will need to look at what tax law provisions will affect this year?s returns. Although there are many tax law changes, the following are tips to help you prepare for filing your 1997 tax return.
1. Get the business? records up-to-date. Most people don?t like keeping records, but waiting until the last minute increases the stress level of the record keeper and increases the chances of mistakes. Up-to-date records are the basis for deciding about tax management strategies that are to be carried out before Dec. 31. Good decisions cannot be made on records that are not current.
2. Separate breeding and dairy livestock sales into sales made before May 7, 1997 and sales made after May 6, 1997. The rates for long term capital gains have been reduced to 20% from 28%, and 10% from 15% for sales after May 6. Sales of breeding and dairy livestock made prior to May 7 will be taxed at the higher 15 and 28% rates The holding period for cattle to qualify for long term gains is still 24 months. Sales of dairy cattle held less than 24 months will be taxed at the higher rates (15 or 28%) for short-term gains. All breeding and dairy livestock sales subject to capital gains treatment are not subject to self employment tax.
3. Carefully review expenditures made for repairs. Repairs are made to keep the property or equipment in a normal, operating condition. Capital expenditures extend the life of the property or equipment, increase the value of the asset or adapt the property to a different use. Repairs are fully deductible in the year of the expense. Capital expenditures are recovered over a period of years as a depreciation allowance.
4. The section 179 expensing allowance increases to $18,000 for 1997. It increases each year to a maximum of $25,000 in 2004. The qualifying assets purchased must contribute to the profitability of the dairy business.
5. The self employed health insurance deduction increases to 40% of qualifying expenses for 1997. The percentage deducted increases each year to 100% in the year 2007.
6. Capital gains may result in exclusion from the earned income credit. Dairymen may often show a loss or little profit on Schedule F, but have significant capital gains income from cull cow sales reported on 4797. Capital gains income of $2200 or more will keep the taxpayer from qualifying for the earned income credit.Even though 1997 may have been a bad year, cull cow sales exceeding $2200 will keep you from taking advantage of this refundable credit.
Milk Price Outlook
- The Basic Formula Price (BFP) in October was $12.84 per cwt., its highest level during 1997. The BFP likely will decline throughout the remainder of 1997. Coffee, Sugar Cocoa Exchange futures prices place the BFP around $12.70 in November and $12.30 in December. Declining milk prices result from slackening demand for cheese and other dairy products.
- Even though the BFP may decline, prices farmers receive for Grade A milk should increase during November due to Class I forward pricing in the Federal Orders. November milk prices should be about $.40 per cwt. above October prices. December prices will likely fall by $.10 per cwt.
- Current supply and demand conditions suggest that milk prices will decline through the early part of 1988. The BFP likely will fall to $11.90, the historical average price, by February or March.