STATE WARNS AGAINST NEW INTERNET LOAN SCHEME

(Omaha World-Herald) -- The Nebraska Department of Banking and Finance warned Thursday against dealing with a company calling itself Penbrook Financial Group and giving a fictitious Omaha address. The department said Penbrook offers personal loans over the Internet and requires upfront "collateral payments" before making loans, usually $2,460 in four monthly payments. The company does not have an office at the address it lists, the department said, and Nebraska law prohibits lenders from requiring advance payments. The department said it is trying to shut down the company's Web site, which does not list a telephone number. The company could not be contacted for comment. People who have dealt with Penbrook should contact the department at 877-471-3445 or the Federal Trade Commission at 877-382-4357. Department analyst Karen Reynolds said people should be careful about making online loan applications that require personal information. Online lenders may try to bypass state law by claiming residence in a different state or may adopt the name of a legitimate business.

STIMULUS CHECK PROBLEMS

There are a number of our clients that have been receiving incorrect economic stimulus refunds. In most cases they were shorted the $300 per child. We have already received a couple of calls on this and we’ll probably hear from more. The issue was on the IRS’ side and they are correcting it. They will be issuing checks/direct deposits for the difference. Fortunately, our software has identified clients that will most likely be receiving incorrect stimulus checks. If you receive the incorrect amount, be patient; the IRS has a glitch in their system and you should be receiving the difference in the future (we do not know the timing).

ZERO TAX RATES ON CAPITAL GAINS

Sometimes our elected officials like to provide deferred gifts. Back in 2003, Congress passed and the President signed into law a provision that provides a zero percent tax rate for certain types of income received by eligible taxpayers. Because the provision wasn’t effective until 2008, it didn’t receive a lot of attention except by us professional tax advisors. Since 2008 is quickly passing we want to alert you to this chance for tax free income. Although this opportunity is scheduled to be around beyond this year, it’s hard to predict what may happen after this fall’s elections. Thus, while the availability of the 0% tax rate seems all but certain to remain unchanged for 2008, after that, there are no guarantees.

How Do You Qualify for the Favorable Rate?

You need to have the right type of income. The 0% rate applies to most long-term capital gains (i.e., gain from selling something such as stock that you’ve held for more than a year) and qualified dividend income (generally dividends from U.S. corporations and certain eligible foreign corporations).

You also need to have the right amount of qualified income and the right mix of other income and deductions to maximize the savings from the 0% rate.

Depending on your filing status, the 0% rate can apply to up to $65,100 of income this year. However, it could also apply to none of your income (even if you have long-term capital gains and/or qualified dividend income), if your other income and deductions don’t net to a small enough number. As a result, qualifying for the favorable 0% rate is very fact specific.

Most Dependents Won’t Benefit

When the 0% tax rate was originally enacted, college aged kids (who perhaps received a gift of appreciated stock from their parents to sell and help pay for college) were expected to be prime beneficiaries of the favorable rate. However, because of a recent change in the so called kiddie tax (a provision that generally taxes dependents’ investment income at their parents’ tax rate), individuals through age 23 are now much less likely to benefit from the 0% rate unless they’re either not a full-time student or a full-time student whose earned income for the year is greater than half the cost of their support.

Conclusion

Because qualifying for the 0% rate is so fact specific, low-income taxpayers (such as an older child who is no longer a student or who is beyond age 23 or a parent that you’re helping support) as well as certain very high-income taxpayers who have mostly capital gain or qualified dividend income and little in the way of other taxable income can all potentially qualify.

As you might imagine they don't make this easy. The key is to understand the rules and the options, if any, that are available to improve the changes of qualifying. As you plan your year end moves make sure you take into consideration this 0% tax free opportunity. Let us know if we can help.

THE LOTTERY IS JUST ANOTHER TAX

Over the years, many people have described lotteries as taxes on stupidity and taxes on people with no math skills. I still got a kick out of this scene from the most recent episode of Reaper, where Ray Wise as the Devil claims that he invented the lottery and has a familiar nickname for it.

REBATE CONFUSION

It seems that there is still a lot of confusion on the rebate. See our website article published a few days ago. I think I have gotten around 20 questions on the stimulus topic.

Not surprisingly, the IRS website has completely contradictory information regarding this, saying both that the rebate will be factored into the net tax on the 2008 1040 and also that it will have no effect whatsoever on the 1040’s bottom line. Obviously, both those claims can’t be true.

It has been my contention from the beginning that this will be handled just as we had to do with the similar advance rebate checks a few years ago. People who did not receive their rebates via checks were able to have that amount credited on their 1040s so that they ended up receiving the same net benefit as those who receive actual checks.

Here is the real deal...

The tax rebate is an advance credit for 2008 and will be calculated on your 2008 return. Now this is important: you are receiving a portion of your 2008 credit EARLY and if you receive it once, you won't receive it again when you file your 2008 return.

And, this is important too: if you're due a higher tax rebate, you'll get the remainder next year when you file. If you received a higher rebate than you should have, you DO NOT have to pay it back. So far, so good.

A tax rebate is not interest, it's not income, it's not a dividend. Pure and simple, and this is worth saying again, the tax rebate payment is an ADVANCE CREDIT for tax year 2008 and will be calculated on your 2008 return when you file in 2009.

GAS PRICES AND ETHANOL ALL OVER THE NEWS

Push for increasing U.S. oil exploration seen as gaining support

(Wall Street Journal) -- Mounting concerns about global energy supply are fueling a drive by the oil industry and some U.S. lawmakers to end longstanding bans on domestic drilling put in place to protect environmentally sensitive areas. However, while there is ample evidence that a lot of oil -- and natural gas -- remains to be found in the U.S. and its territorial waters, expanding U.S. oil production would require overturning decades-old moratoriums that limit offshore drilling and accelerating leasing of federal lands, moves that would trigger a swift and vigorous political backlash. Still, during a meeting with the House Judiciary Committee Thursday, oil executives insisted that Congress should focus its efforts on allowing more drilling and exploration for domestic oil.



‘IEA fears future oil supply may not satisfy demand’

(AP) -- The Paris-based International Energy Agency (IEA) is currently studying depletion rates at about 400 oil fields in a first-of-its-kind study of world oil supply. Though the "results will be released in November, the report is expected to further upset markets as the IEA fears there may not be enough oil to slake the world's thirst. IEA's chief economist Fatih Birol would not speculate on whether the forecast, which will predict supplies through 2030, could go sharply downward.



'Ethanol turmoil a serious threat to some companies'

(AP) — Not long ago, the fledgling ethanol industry was the darling of investors, farmers, the federal government and a lot of Americans who liked the idea of turning corn into fuel. But rising worldwide food prices and shortages have spurred calls in Congress to roll back the federal requirement that increases the amount of ethanol and other biofuels blended with the nation's gasoline supply. Critics say so much corn is being used for ethanol that there's less available for people and animals to eat, raising prices of everything from tortillas to meat. "Consumers are starting to get restless and Washington is starting to listen," said Morningstar analyst Ann Gilpin, who follows Decatur, Ill.-based Archer Daniels Midland, the country's second-largest ethanol producer. The ethanol market would be severely limited if Congress rolled back the federal mandate that calls annual increases in the amount of biofuels added to the fuel supply — 9 billion gallons by the end of this year, increasing to 36 billion gallons by 2022. But the odds of Congress changing that mandate this year are slim because the 10 states — mostly in the Midwest — that produce over 80% of all American ethanol have between them almost half of the 270 electoral votes needed to win a presidential election, said analyst Kevin Book of Friedman, Billings, Ramsey & Co. After the election, though, sentiment about the mandate could change. Congress was already willing to take a modest swipe at ethanol when it approved a farm bill this month with a provision that would shave a tax credit for refiners that blend ethanol into their gasoline from 51 cents to 45 cents. Many analysts say the pressure on the industry would ease with a drop in food prices. Ethanol companies have gone on a public relations campaign in the past few weeks, touting studies that raise doubts about the degree to which ethanol is affecting global food prices. The industry also argues that drivers buying gasoline blended with a small amount of ethanol are paying less than they otherwise would. Nebraska ranks second nationally in ethanol production. The state's Ethanol Board says Nebraska's 21 ethanol plants annually produce more than 1.3 billion gallons of ethanol, using nearly a half billion bushels of corn.



'Energy Advisor Warns of $12-15-a-Gallon Gas'

(Business & Media Institute) -- It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is “inevitable.” Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 “Squawk Box”. He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem. Hirsch told the Business & Media Institute the $12-$15 a gallon wasn’t his prediction, but that he was citing Charles T. Maxwell, described as the “Dean of Oil Analysts” and the senior energy analyst at Weeden & Co. Still. Hirsch admitted the high price was inevitable in his view.



'Experts disagree on reasons for oil surge'

(Washington Post) -- Even experts are confused about oil prices, reporting that oil executives say it's partly the fault of speculators or financial players. Key financial players say it's really a question of limited supply and expanding global demand. Some members of Congress accuse Organization of the Petroleum Exporting Countries (OPEC) for bottling up some of its production capacity. Meanwhile, OPEC blames speculators, wasteful U.S. consumers and feckless U.S. policy. Almost everyone points at China's growing appetite for fuel. Analysts interviewed by the Post argue that oil prices have risen from "$20 to $130 dollars [because] world demand is growing robustly when world supply is not." The experts also pointed out that some developing countries like India are paying large fuel subsidies to keep oil prices down in their countries.



'Back to the 19th century? High fuel prices lead farmers to use mules'

(AP) -- High gas prices have driven a Warren County, Tenn. farmer and his sons to hitch a tractor rake to a pair of mules to gather hay from their fields. T.R. Raymond says: "This fuel is so high, you can't afford it. We can feed these mules cheaper than we can buy fuel. That's the truth."

Senators Warn Climate Bill Could Spike Gas $1.50 to $5 a Gallon

(Business & Media Institute) -- Worried about gas prices hitting $4 a gallon and beyond? Imagine if they were $6, $7 or even $8 a gallon. Those levels are a certain possibility should Congress pass cap-and-trade legislation, which could face a vote in early June, according to Republican Sens. James Inhofe (Okla.) and Jeff Sessions (Ala.). Both lawmakers said energy prices would drastically increase if the Lieberman-Warner Climate Security Act (S. 2191) is signed into law.

According to Inhofe, the bill will make it to the floor of the Senate on June 2. Sessions, a member of the Senate’s Committee on Energy and Natural Resources, cited sources that suggest the increase could be as much as $5 a gallon. Sessions proposed that money should be spent on energy investment versus a regulatory bureaucracy to enforce the provisions of the Lieberman-Warner bill. “I’d rather spend our money in investing in the new the technologies, helping get nuclear power online, improving batteries, researching cellulosic ethanol. Let’s spend our money on that without creating cap-and-trade bureaucracies that have not worked in Europe.” Inhofe said: “You know the Democrats, right down party lines – they do not want to drill in ANWR, they do not want to drill offshore. They don’t want the tar sands. They don’t want more energy. And they don’t want refinery capacity.” The Senate defeated a measure to drill in ANWR on May 13. The vote, an amendment to another bill, was killed by a vote of 42-56, largely along party lines. Only one Democrat voted for the amendment, Sen. Mary Landrieu (D-La.), and five Republicans voting against it.

Inhofe said he predicted fuel prices would soar 10 years ago when President Clinton vetoed the bill that would have allowed production in ANWR. "I said on the Senate floor that day 10 years ago that in 10 years we would regret this."

'Executives call for more oil exploration at Senate committee meeting'

(New York Times) -- As executives from the U.S.'s five largest oil companies met with the Senate Judiciary Committee on Wednesday, Democrats vented their fury over high gasoline prices, grilling the oilmen over their multimillion-dollar pay packages and warning them that Congress was intent on taking action that could include a new tax on so-called windfall profits. And momentum is building for several measures, including a bill that would allow the Organization of the Petroleum Exporting Countries to be sued in American courts under antitrust laws," but "there is little sign that any of the proposals would do much, if anything, to lower prices quickly. The oil executives, representing Exxon Mobil, ConocoPhillips, Royal Dutch Shell, Chevron Corp., and BP PLC, called for Congress to open more exploration in the U.S. -- a plea the Democratic majority has rejected. Some of the executives argued that "the cost of producing a barrel of oil should be about $55 to $65 a barrel, if it were not for a weak dollar, geopolitical concerns about supply disruptions, and speculation in the market.



'Editorial blames high oil prices on Congress'

(Investor's Business Daily) -- Investor's Business Daily editorializes that, though Congress is alarmed by our failed oil markets, it is "mostly the fault of the Congress that we're in this mess." The "markets have failed" because of "Congress's refusal to let oil companies drill on federal lands, thereby cutting sharply into our supply of crude as world demand grows and prices soar both here and abroad." The Daily calls Congress's "ignorance of basic laws of supply and demand...at once bizarre, breathtaking, and frightening," and asserts that "this ridiculous blaming of oil companies must stop, and ... the companies must be allowed to get back into the business of pumping oil." Only then will "the markets that ignorant and demagogic politicians called 'failed' [begin to] again turn out plentiful energy at prices people can afford."


'EDITORIAL: Let’s Sue OPEC! That’ll Teach ‘Em!'

(EnergyTribune.com) -- When it comes to energy policy, Congress keeps getting dumber and dumber. The latest example: a bill passed by the House of Representatives on Tuesday that will allow the U.S. government to sue OPEC for conspiring to raise prices. There are several reasons why the bill, which passed by a margin of 324 to 84, makes no sense. If the U.S. can demand that foreign oil producers increase their output, what’s to stop them from demanding that we produce more of what they want? Corn, for example? A clever chemical engineer said that by threatening to sue OPEC, the U.S. is demanding that the oil-producing countries “produce according to the price we prefer to pay -- not necessarily what's in their own best long-term interest.” The U.S. has no legal right to compel foreign companies (or countries) to produce more of anything. The other problem with the House measure is its blatant hypocrisy. Congress has restricted drilling in the U.S. by making the Arctic National Wildlife Refuge and other areas off-limits to oil and gas exploration. Thus, the U.S. wants to protect its own environment –- by preventing new oil production in America -- while demanding that foreigners spend billions to drill on their lands. We’re told repeatedly that ANWR won’t make much difference in terms of new supplies. Not true. According to the U.S. Geological Survey, the refuge holds about one-third of America’s oil reserves and more than half of its gas reserves. We could replace nearly 10 percent of the oil we import daily with ANWR supplies alone. The new House measure aimed at OPEC comes just one week after a Senate vote that prevents energy companies from drilling in ANWR. On May 13, by a margin of 56 to 42, the Senate blocked a measure that would have allowed oil exploration in ANWR and in areas that lie offshore the Pacific and Atlantic coasts. After the vote, Sen. Richard Durbin, an Illinois Democrat, dismissed the idea that domestic energy production will do any good, declaring that “We can’t drill our way to lower prices.” It just gets dumber and dumber.

CATTLE HERD LIQUIDATION SEEN AS TROUBLING SIGN

(Brownfield Network) -- The Daily Livestock Report published by the Chicago Mercantile Exchange earlier this week noted troubling evidence of cattle herd liquidation. The report's authors noted an increased pace of cattle slaughter this year amid steadily climbing feed costs. "Despite high cow slaughter rates in 2006 and 2007, current cow slaughter remains well above year ago levels," the Report said. DTN Chief Livestock Analyst John Harrington told Brownfield the slowly dwindling U.S. cattle herd hasn’t yet fully translated into higher costs to consumers. And when that happens, Harrington suggested the entire dynamic of beef consumption in America could change. "Beef may become very expensive and something you eat relatively rarely and more likely in a restaurant than anyplace else," Harrington said. "I'm not predicting that, but certainly that's a concern." Harrington pointed out the average age of beef producers is getting older, not younger, reducing the incentive to ramp production back up even when prices do improve. As for the possibility of big future beef demand increases, Harrington emphasized the most potential still lies overseas. And he noted sanitary and phytosanitary trade barriers still limit opportunities for U.S. beef in that arena.

WHERE IS MY REBATE CHECK?

We have received questions lately from people that have not received their rebate check. I think we have already posted just about every bit of information available regarding the Stimulus Rebate, but there are a few items worth repeating.

To view these items, go to our website at www.kopsaotte.com. Click on Forms and Publications, and then select Answers to Your Stimulus Payment Questions.

GAS $10 PER GALLON

I remember the "good old days" when gas was less than $1.00 per gallon. That's not all. An attendant would come out to your car; fill your tank; wash your windows; check your oil; air your tires... and you would get a set of silverware as a promotion. Those days are gone.

Here is an interesting article that estimates what would happen if gas went to $10.00 per gallon. There is a calculator in the article that estimates your gas cost should this happen. What If Gas Cost $10 A Gallon?

USDA SAYS ETHANOL GETTING A BUM RAP

(Omaha World-Herald) — The U.S. Department of Agriculture revved up its defense of ethanol and other biofuels Monday. Secretary of Agriculture Ed Schafer and other top USDA brass said ethanol has played a relatively minor role in rising food prices. Bigger factors include skyrocketing gas prices, increased global consumption of meat and dairy products, and significant droughts in several areas around the world, they said. However, Scott Openshaw, Grocery Manufacturers Association spokesman, points to sharply rising food prices in their fight against ethanol requirements. The USDA says the increase last year for all foods was about 4%, while the projection for 2008 increases in food prices is 4.5% to 5.5%. "A very significant driving force behind that has been corn being diverted into fuel," Openshaw said. Schafer and others have pointed to droughts in Australia, Europe and the U.S. as having a significant effect on commodity prices worldwide. They also cited increased demand for meat and dairy products among the expanding middle class of India and China, meaning more feed is being consumed by more livestock.

IS RURAL NEBRASKA DYING?

(KTIV, Sioux City) -- Is rural America dying? Economic development leaders in Nebraska say yes. With the workforce leaving for better paying jobs in bigger cities, leaders are asking themselves, how can rural towns retain businesses, fill schools, and stay vibrant? An economic summit Thursday in Wayne, Neb., sought to answer those questions. Mayors, city council members, and economic development leaders from all over Nebraska attended seminars and networked with economic development experts. The summit's keynote speaker said rural towns need to recognize that it's not location that keeps people in town; it's quality of life. "Communities that invest in themselves and create the amenities that attract people," keynote speaker Don Holbrook said. "Like having a great college like Wayne State here as an asset, huge asset. If they play off of that, any community can be a world class community." From sessions throughout the day, to networking and meeting other economic leaders, the summit's goal was to share experiences and forge partnerships throughout the region. The summit was funded by a grant from the Nebraska Department of Economic Development.

OBAMA ENERGY PLAN - HERE GOES MY SUV

(AFP) — Sen. Barack Obama set his sights on November's general election this weekend as he campaigned in Oregon, where he hopes to declare victory in the race for the Democratic presidential nomination. In a speech Saturday, the Illinois Democrat attacked Sen. John McCain's plan for a gas tax holiday, as well as his other environmental plans, saying the Republican had consistently opposed fuel efficiency standards. "For him to come to Oregon as an environmental president, but his big strategy is to do more drilling and to have a gas tax holiday for three months, that's a phony solution," he said.

Obama called on the United States to "lead by example" on global warming. "We can't drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times ... and then just expect that other countries are going to say OK," Obama said. "That's not leadership. That's not going to happen," he added.

TAX BREAKS FOR HYBRID VEHICLES

As the price of gas continues to go up, we have been receiving questions about hybrid vehicles. You may find the following information helpful.

A purchaser of a hybrid passenger automobile is allowed a tax credit of from $400 to $3,400 depending on the model. A credit is usually more advantageous than a deduction because a tax credit is subtracted dollar-for-dollar off the bottom line of your federal tax bill, while a deduction simply reduces taxable income. The credit applies to both business and personal vehicles.

The amount of the hybrid credit depends on the fuel efficiency of the vehicle. The more gas it saves, the higher the credit. However, calculating the credit is a bit complicated, with the exact amount of your credit depending on three separate factors: the weight of the vehicle, its fuel economy, and its lifetime fuel savings. IRS has certified various hybrid models made by Ford, General Motors, Toyota, Honda, Nissan, and Mazda as qualifying for the credit. In each case, the certification specifies the amount of the credit for the particular model.

However, the law limits the credits to 60,000 hybrid vehicles from each automaker. This total includes all brands sold by the particular automaker. Thus, for example, the Ford total includes Ford and Mercury hybrids. Once a manufacturer has sold 60,000 hybrid vehicles, the tax credit for that manufacturer's hybrids is slowly reduced over the next five consecutive quarters, eventually dropping to zero.

Honda hybrid sales reached the 60,000-vehicle limit during the calendar quarter ended Sept. 30, 2007. As a result, the credit for Honda hybrid vehicles is being phased out. For Honda hybrid vehicles purchased after Dec. 31, 2007 and before July 1, 2008, the credit is 50% of the otherwise allowable credit amount. Honda hybrids purchased after June 30, 2008 and before Jan. 1, 2009 qualify for 25% of the otherwise allowable credit. Toyota hybrid sales reached the 60,000-vehicle limit during the calendar quarter ended June 30, 2006. Accordingly, the credit for Toyota hybrids has completely phased-out. After Sept. 30, 2007, purchasers of Toyota (including Lexus) hybrid vehicles cannot claim the related tax credit. Hybrid vehicles built by the other hybrid manufacturers haven't yet reached the 60,000-vehicle limit, and thus continue to qualify for the maximum credit allowable.

Here are some additional points about the credit:

In general, the credit is allowed to the vehicle owner, including the lessor of a vehicle subject to a lease. Thus, if you lease a hybrid (rather than purchase it), you won't qualify for the credit.

The credit is allowed in the year the vehicle is placed in service.

The vehicle must be used predominantly in the U.S. to qualify for the credit.

The original use of the hybrid auto must begin with you, i.e., the vehicle must be new.

The credit isn't allowed if you buy the hybrid auto for resale.

No credit is allowed for the portion of the cost of any property taken into account under Code Sec. 179, the expensing election provision.

Please email us at lkopsa@kopsaotte.com if you would like to receive additional general information about hybrid vehicles, or if you would like to be advised in connection with a specific purchase.

RISKY TIME FOR FARM ECONOMY

I received this MSNBC article via email from a client. It is depressing but I thought you might be interested. Click on this link to check it out: Amid Strong Farm Economy, Some Dire Signs.

CORN GROWERS: BLAME MISPLACED ON ETHANOL IMPACT ON RISING FOOD COSTS

(Grand Island Independent) — Rick Tolman, chief executive officer of the National Corn Growers Association, said a "massive disinformation campaign" against ethanol was started by the oil industry which doesn't want the competition. It also may have been started by those, such as the meat industry, that want corn to return as a low-cost feed for livestock, he said. American Meat Institute President and CEO J. Patrick Boyle recently told Congress that valuing food for its energy content instead of nutrition is adding "unnecessary inflationary pressure on the U.S. economy." Boyle said that, in 2007, livestock and poultry producers saw their feed prices rise by more than 65% and are anticipating an equally difficult environment for 2008. But when it comes to blaming corn and ethanol for rising food prices and world hunger, Tolman said the argument doesn't hold water. Tolman said there are myriad factors that have increased food costs, such as a growing middle class in Latin America and Asia; drought in Australia; low worldwide wheat stocks; increases in labor costs; a declining U.S. dollar; regional pests, diseases, droughts and frosts; and marginal impacts from ethanol demand for corn and sugarcane. Nebraska ethanol plants represent more than $1.4 billion in capital investment and provide direct employment for some 1,000 Nebraskans. Nebraska ranks second nationally in ethanol production. Also, because of the Renewable Fuels Standard, the American Farm Bureau Federation said gas prices have already been lowered by as much as 15%, saving the consumer roughly 50 cents per gallon. Tolman said even if the RFS is cut back, gas prices and food prices would not go down as oil could rise as high as $200 within two years because of increased demand.

ETHANOL FACES NEW SCRUTINY AS COST DRIVER

(AP) -- Just months ago, ethanol was the Holy Grail to energy independence. Democrats and Republicans cheered its benefits as Congress directed a fivefold increase in ethanol use as a motor fuel. President Bush called it key to his strategy to cut gasoline use by 20% by 2010. But now with skyrocketing food costs -- even U.S. senators are complaining about seeing shocking prices at the supermarket -- and hunger spreading across the globe, some lawmakers are wondering if they made a mistake. “Our enthusiasm for corn ethanol deserves a second look. That’s all I’m saying, a second look,” said Rep. Jane Harman, D-Calif., at a House hearing Tuesday where the impact of ethanol on soaring food costs was given a wide airing. Sen. Charles Grassley, R-Iowa, one of the Senate’s two working farmers and a longtime ethanol booster, said he finds it hard to believe that ethanol could be “clobbered the way it’s being clobbered right now” over the issue of food costs. The governor of Texas and 26 senators, including the GOP’s presumptive presidential nominee John McCain, are asking the Environmental Protection Agency to cut this year’s requirement for 9 billion gallons of corn ethanol in half to ease, they say, food costs. Connecticut’s governor recently asked Congress to temporarily waive the requirement. Meanwhile, Sen. John Thune, R-S.D., is gathering senators’ signatures on a letter opposing any EPA action so “this attack on ethanol will be blocked,” said a statement from Thune’s office. The 2007 energy bill contained a requirement for refiners to ramp up ethanol use to 36 billion gallons a year by 2022 from about 7 billion gallons last year. In a massive farm bill not yet signed by President Bush -- for the first time in memory -- lawmakers recently trimmed back the federal tax subsidy for corn ethanol, reducing the tax break from 51 cents to 45 cents a gallon.

AG RELATED INDUSTRIES BENEFIT FROM HIGH PRICES

(CNN) -- The nation's economy may be weak overall, but one industry is booming and farm states are benefiting. Higher grain prices mean many farmers have money to spend. It's non-stop work inside the Hesston, Kan. AGCO plant, workers are churning out farm equipment at record levels. "Things are booming absolutely," said Andy Blanford of AGCO Corporation. The reason -- record grain prices. Not only are they paying off for farmers, anything ag related is thriving. Wheat and corn are at record prices. Blanford says more than 1,300 people are working at his plant now and they are recruiting workers from all over the area. Demand is so high they're having trouble finding qualified people. "We need all the skilled help we can get," he said. Like many small Midwest and Plains' communities, when farmers have more money to spend, the town benefits. "It's a benefit to the whole community, the school system, and everyone benefits from AGCO," said Mick Petrocci of the local True Value Hardware store.

CHANGING OUR STRATEGY

One day, there was a blind man sitting on the steps of a building with a hat by his feet and a sign that read: "I am blind, please help." A creative publicist was walking by and stopped to observe. He saw that the blind man had only a few coins in his hat. He dropped in more coins and, without asking for permission, took the sign and rewrote it.He returned the sign to the blind man and left.

That afternoon the publicist returned to the blind man and noticed that his hat was full of bills and coins. The blind man recognized his footsteps and asked if it was he who had rewritten his sign and wanted to know what he had written on it. The publicist responded: "Nothing that was not true. I just wrote the message a little differently." He smiled and went on his way.

The new sign read: "Today is Spring and I cannot see it." Sometimes we need to change our strategy. If we always do what we've always done, we'll always get what we've always gotten. I hope you have a wonderful day! Spring is finally here and I thank God that I can see it.

FARM BILL HIGHLIGHTS

(CQ Today) -- The farm bill is a multibillion-dollar reauthorization of federal farm, nutrition assistance, rural development and agricultural trade programs. The heart of the farm bill is income and commodity price support policy, but the measure also deals with agricultural trade and foreign food aid, conservation and the environment, forestry, domestic food assistance, agricultural research and more. Some bill highlights:

• Direct payments, subsidies that farmers always get regardless of crop prices, would be cut overall by $313 million by reducing the percentage of acres for which a farmer can collect those payments from 85% to 83.3%.

• The bill would allow fruits and vegetables to be planted on 75,000 acres of land typically used to grow government-subsidized crops such as corn and soybeans, so long as that produce was used for processed and canned foods. That would change the current planting restrictions that prevent farmers from growing fruits and vegetables on land subsidized by the government.

• The Conservation Reserve Program, a program that pays farmers to preserve land instead of farm it, would be reduced from 39.2 million acres to 32 million acres.

• The government would subsidize the purchase of excess sugar in the American market to make sugar-based ethanol.

• The definition of “rural” would be changed to make sure that USDA dollars go to rural areas with the greatest need.

• The ethanol tax credit would be extended for two years, but would be reduced 6 cents to 45 cents per gallon. The ethanol tariff would be extended for two years as well.

• The legislation would create the Biomass Crop Assistance Program, which would provide incentives for producers to establish and grow cellulosic energy crops.

NEW FARM DEAL DRAWS VETO THREAT

(CQ Today) -- Despite some House Republican opposition to the new farm bill, lawmakers on both sides of the aisle say they’re confident Congress would be able to override a veto of the bill. On Thursday, Agriculture Secretary Ed Schafer reiterated the administration’s veto threat, saying farm subsidies in the bill are still far too generous. The Congressional Budget Office has not estimated the final cost of the agreement, but lawmakers and their aides said it could reach upward of $600 billion over 10 years. The wide-ranging bill (HR 2419) includes new limits on who can get crop supports, extra funding for nutrition, rural development programs and expanded conservation initiatives, among other things. Conferees are expected to sign off on the agreement by early next week, allowing the House and Senate to vote on the conference report May 14, lawmakers said.

FARM BILL NEGOTIATORS SAY THEY HAVE TENTATIVE AGREEMENT AS BUSH CONTINUES TO OBJECT

(AP) -- Negotiators on a five-year, $300 billion farm bill say they have reached a tentative agreement on the legislation and it will be considered by the House and Senate next week. But the Bush administration has objected to the bill, and the White House says it seems unlikely that Congress will pass farm legislation the president can sign. President Bush has said the bill is bloated with farmer subsidies in a time of record crop prices and is too expensive. Senate Agriculture Committee Chairman Tom Harkin, a Democrat, said after meetings Wednesday that the negotiating is finished, but he acknowledged that some minor issues remain unresolved. The agreement would eliminate some government payments to individuals who make more than $750,000 in farm income annually, which would be closer to the White House's proposal on limiting subsidies. Those who make more than $500,000 in non-farm income would also be ineligible for subsidies. The Bush administration originally proposed a cap for those who make more than $200,000 in annual gross income. Two-thirds of the legislation is nutrition programs, including food stamps. Lawmakers agreed last month to provide more than $10 billion extra over 10 years for those programs. The bill would also expand subsidies for several crops and create new grants for vegetable and fruit growers. The legislation would also increase loan rates for sugar producers, extend dairy programs and provide more dollars for renewable energy and conservation programs to protect environmentally sensitive farm land.

QUESTION ABOUT INCENTIVE REBATE

Larry, I filed electronically, received my refund via direct deposit but, despite my SS# ending in 15, I have not yet received any deposit for the economic incentive initiative which according to reports, should have been deposited 5/2. Turbo Tax indicated I would get the $600.00. Thanks for your response, Carl

Carl, You are not the only one that has not received their refund. The IRS says to wait 60 days. Let me know if you get your electronic deposit. If you don’t receive it, let me know and we will see if the IRS has set up any procedures to track.

It is a pleasure serving you.

Larry Kopsa CPA