STATE CHAMBER BOARD MEETS IN SCOTTSBLUFF, VOTES TO OPPOSE PETITION EFFORT

(State Chamber release) -- On June 6, the Nebraska Chamber of Commerce & Industry board of directors gathered for its summer meeting in Scotts Bluff County. Held at the John Harms Advanced Technology Center in Scottsbluff, the meeting was headlined by District 48 Senator John Harms, who presented board members with an analysis of the challenges facing the state and its business sector. In official business, the board voted to oppose the initiative to amend the state constitution as proposed by the Nebraska Civil Rights Initiative. If the initiative were to succeed and the question approved by voters, preferential treatment on the basis of race and gender in public education, state hiring and public contracts would be prohibited, which could spur unintended, negative consequences. The State Chamber's policy is that Nebraska’s elected officials should address this issue in a manner and procedure that best serve the interests of the state, including holding public hearings to gather information and policy recommendations from Nebraska citizens. The board was also briefed on preparations for the Governor's upcoming reverse trade mission in September, as well as early plans to recognize the 100th anniversary of the State Chamber.

"HIDDEN TREASURES" IN GENEVA JULY 3rd & 4th

Not only is Max Miller one of our successful farm clients; he also does photography. His upcoming show will be Thursday, July 3rd from 12:00pm - 9:00pm; and Friday, July 4th from 9:00am - 7:00pm.

This fine art exhibit entitled, "Hidden Treasures", will be located at 125 South 10th Street in Geneva, NE and will also include paintings by Patricia Scarborough.

MY DAD ALWAYS TOLD ME, "SON, DON'T TALK ABOUT RELIGION OR POLITICS"

Although I try to take my father's advice not to talk about politics, I think that it is important for you to know what the two presidential candidates are proposing as changes to the federal tax system.

The 2008 presidential election promises to be a spirited campaign. Now that the Democrats have voted Hillary off the island, we can watch Barack Obama and John McCain explore their differing visions for America in a dignified, intellectual manner, reminiscent of the famed "Lincoln-Douglas" debates that set such a responsible tone for presidential politicking. Unless, of course, the campaign consultants have their way, in which case we can expect a slug fest that makes the "Thrilla in Manila" look like a local school board race.

I'm looking forward to seeing each candidate's Vice-Presidential pick. Obama should probably look to someone older and more conservative, with a military background -- in other words, John McCain! (Just a little humor).

To help you see the differences, we've prepared a chart outlining each of their main proposals in the areas of income taxes, employment taxes, estate taxes, and health care financing.

You'll find McCain's proposals, for the most part, to be what you'd expect from a reputed "maverick" Republican looking to shore up support with his party's base. Make the Bush tax cuts permanent. Require a three fifths Congressional majority to raise taxes. Cap the estate tax at 15% and apply it only to estates topping $10,000,000. But McCain also proposes to eliminate the deduction for employer-provided health insurance (currently a $90.6 billion annual tax preference) and replace it with a credit of $2,500/person and $5,000/family for health insurance premiums. (This would likely eliminate the deduction for Medical Expense Reimbursement which is a great tax break for many small businesses.)

Similarly, Obama's proposals are mostly what you'd expect from a progressive Democrat. Keep the "best" part of the Bush tax cuts benefiting married couples, families with children, and small businesses. Restore the 36% and 39.6% marginal rates on the highest earners, and raise the capital gains rate back to 20% or even 28%. Establish new, refundable tax credits for students and homeowners who don't itemize. But Obama's plan includes a wild card too -- specifically, eliminating the current $102,000 "wage base" on income subject to Social Security (and self-employment) tax.

Of course, merely proposing a specific change doesn't mean we'll actually see it become law. If McCain wins, he'll likely face a Democrat-controlled Congress, which would greet his proposals skeptically. If Obama wins, he's unlikely to enjoy veto-proof majorities in either house.

To make sure that I am following the wisdom of my father, I am talking policy here, not politics. I certainly don't want to intimidate or offend anyone.

Please let me know if you have any questions.

Larry Kopsa CPA

"CAMPAIGN 2008" TAX COMPARISON

RATES

Obama

• Expand 10, 15, 25, and 28% rate brackets
• Restore 36% and 39.6% rates for highest incomes
• Increase capital gains rates from 5% to 10% and from 15% to 20 or 28%
• Tax "carried interest" earned by private equity & hedge fund managers as ordinary income

McCain

• Make Bush tax cuts permanent
• Require 3/5 Congressional majority to raise taxes

CUTS/CREDITS

Obama

• Permanently adopt current rules for marriage penalty relief, expanded Child Tax Credit, and expanded Adoption Tax Credit
• Eliminate tax on seniors earning < $50,000
• Expand EITC
• Create refundable "Universal Mortgage Credit" equal to 10% of interest payments for non-itemizers
• Expand Saver's Credit; make refundable
• Create refundable "American Opportunity Tax Credit" for first $4,000 of college costs
• Make R&D Credit and R&E Credit permanent
• Expand Production Tax Credit for 5 years; add incentives for renewable energy

McCain

• Raise personal exemption for dependents to $7,000
• Expand first-year expensing for new equipment and technology

EMPLOYMENT TAXES

Obama

• Impose Social Security tax on employment income over $250,000
• Create refundable "Making Work Pay" tax credit of 6.2% of earnings up to $8,100]

McCain

• No Changes

ESTATE TAX

Obama

• Freeze tax at 2009 levels

McCain

• Cap tax at 15% on estates over $10MM

ADMINISTRATION

Obama

• Give taxpayers option to accept IRS-completed forms to verify, sign, and return

McCain

• No Changes

AMT

Obama

• No Changes

McCain

• Permanently repeal AMT

HEALTHCARE

Obama

• Create national public plan for individuals and small employers

McCain

• Eliminate tax breaks for employer-provided health insurance; replace with tax credits (($2,500/individuals, $5,000/families) for buying insurance

WATCH OUT FOR THIS SCAM

There are scam artists all over, taking advantage of us as people. I just received a form from one of my clients in California with “Disclosure Statement Board of Business Compliance Annual Minutes Division” requesting they fill out the information about the corporation and submit $125.

The clients sent it on to me, and in looking at this I had not heard of it before. I have done some checking on the internet and read the instructions much closer, and this was basically a scam.

It seems all you need anymore is a printer that can print a legal looking form and a post office box and you can rip people off.

My warning is don’t take everything for granted. Check very closely before you pay these amounts that are fairly immaterial, but certainly add up.

If you are concerned that you are being scammed, it pays to Google the entity to see if there is information. Here are some online resources that you can use:

http://www.fraud.org/

http://www.ftc.gov/

http://www.bbb.org/

NEW MILEAGE RATES

Due to rising gas prices, the mileage rate will increase by eight cents to 58.5 cents a mile for all business miles driven from July 1 through Dec. 31, 2008. The new rate for computing deductible medical or moving expenses will also increase by eight cents to 27 cents a mile. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. See news release IR-2008-82 and Announcement 2008-63.

BANKERS SAY RURAL ECONOMY DECLINING DUE TO WEATHER AND FUEL PRICES

(Omaha World-Herald) -- For the second consecutive month, rural bankers in the Midwest on Thursday reported the largest economic decline since Creighton University began surveying them in late 2005. Weather contributed to the downturn, especially flooding in Iowa and Illinois that damaged crops and hurt business activity in general, according to Creighton economist Ernie Goss. The 180 bank executives' responses yielded a MainStreet Economic Index of 40.8, down from 42.6 in May. An index below 50 indicates economic decline. The bankers also noted declining home sales, hiring and retail sales. Yet, overall loan volume was up. The bankers reported decreasing checking deposits, farmland prices and farm equipment sales. Nebraska's index dropped sharply, to 41.8 from 62 in May. One-fourth of the bankers said weather would hurt local corn yields, and many said high fuel prices were hurting the crop and livestock sectors as well as general business activity.

HAGEL AND KOREAN BEEF COMPROMISE

(Grand Island Independent) -- U.S. Sen. Chuck Hagel, R-Neb., said a compromise between U.S. and South Korean trade negotiators will help to put U.S. beef on the tables of South Koreans. He said the compromise being proposed by South Korea is to accept beef from cattle 30 months or younger from the United States, "to get us through the immediate crisis." After speaking with producers and livestock organizations, Hagel said, he got a consensus that they would agree to a compromise like that. U.S. Sen. Ben Nelson, D-Neb., said he doesn't support changing Korea's recent agreement to resume importing U.S. beef according to international, science-based guidelines. South Korea banned U.S. beef after the first North American case of bovine spongiform encephalopathy, also known as mad cow disease, was identified in a U.S. dairy cow in 2003. When South Korean President Lee Myun-bak recently announced plans to lift the ban, that prompted protests by thousands of South Koreans. His cabinet offered to step down amid a growing political crisis. Nelson said a pending trade agreement with South Korea should not move forward until the beef issue is resolved. South Korea was the third-largest overseas market for U.S. beef until it suspended imports. Before the ban, South Korea was Nebraska's second-largest beef market, valued at $108 million annually. Restricted imports of U.S. beef reached South Korean supermarkets last year, but shipments were put on hold after banned parts, such as bones, were found in a shipment.

YOUR BUILT IN TAX SHELTER - HIRE YOUR KIDS

The New York Times recently reported that the 2008 job market is shaping up as the weakest in 50 years for teenagers seeking summer work. (Welcome to the real world, kids!) But if you own a business you can create real savings by hiring your kids for the summer or maybe even for the entire year.

Here are the rules:

· Wages you pay to children (or grandchildren, and even parents) are a deductible business expense if you pay them to perform bona fide work for your business and you pay them reasonable compensation for that work.
· Your child can earn up to the standard deduction for single taxpayers ($5,450 for 2008) before they owe regular tax on their income. The next $8,025 is taxed at just 10%. Earned income is not subject to the "kiddie tax" for children under 19, or dependent full-time students under 24.
· The Tax Court has approved payments to children as young as seven years old, but the younger the child the better the documentation should be.
· Your child's work should be directly related to your business.
· "Reasonable compensation" is an amount that would be similar to amounts paid for similar services by similar businesses under similar circumstances -- with adjustments made for the employee's age and experience.
· To verify your a child's employment, keep a time sheet showing dates, times, and services performed.
· Pay your child by check (to verify payment from the business) and deposit the check in an account in the child's name (to verify payment to the child). The account could be a Roth or regular IRA, Section 529 College Savings plan, or even a custodial account where you manage funds yourself.
· You can't use funds from a custodial account for obligations of parental support. However, private and parochial school, summer camps, and similar "extras" aren't considered "obligations" of parental support. You've got lots of places to put those wages besides your kids' "pizza and Nintendo" fund.
· If your business is taxed as a proprietorship or partnership (and, in the case of a partnership, you and your spouse own all of the partnership interest), no FICA is due on your child's wages until they turn 18. No FUTA is due until they turn 21.

Hiring family members creates obvious tax savings by shifting income to lesser-taxed children. But it also may let you establish employee benefit programs, like the Section 105 Medical Expense Reimbursement Plan and Education Assistance Plan, on their behalf if you have the right fact pattern.

Hiring kids should be a key year-round strategy.

PIVOTS TOOK A BEATING

(Omaha World-Herald) - Nebraska farmers and irrigation suppliers are racing the clock to replace hundreds of storm-battered center pivots before the weather turns hot and dry. Perhaps as many as 500 center pivots were damaged or destroyed in the tornadoes and thunderstorms that hit the state this spring, said to Bobbie Kriz-Wickham, a policy analyst with the Nebraska Department of Agriculture. More precise figures remained unavailable Monday. Many farmers who lost the pricey equipment find themselves on waiting lists for replacement pivots and the specialized crews to install them. The financial blow is compounded because the price for center pivots has jumped by 10% to 20% in the past year.

FEED COSTS THREATEN LIVESTOCK INDUSTRY

(Grand Island Independent) — As feed costs for Nebraska's livestock industry skyrocket, the Nebraska Farm Bureau is urging the USDA to provide crop-insurance flexibility to encourage feed-crop production on wet fields. Widespread rain and flooding have caused corn and soybean prices to skyrocket as demand increases worldwide. Corn is edging near $8 per bushel and soybeans near $15 per bushel. Especially hard hit is the pork industry. Retail pork prices will rise, and some producers will go out of business because of crop conditions and feed scarcity, the National Pork Producers Council warned last week. Just to break even, producers will need an increase of at least 17% in retail prices next year. That's due to the rise in feed costs, which account for 70% of the cost of raising a hog. Corn prices have increased by 124% and soybean prices by 94% since September. From October through April, pork producers lost an average of $30 on each hog marketed.

NEBRASKA TAXES ONE OF THE HIGHEST IN THE NATION

Nebraska's state/local tax burden is among the nation's highest, according to the non-partisan Tax Foundation. Estimated at 11.9% of income, Nebraska's state and local tax burden percentage stands at 9th highest, well above the national average of 11.0%. Nebraskans pay $4,549 per-capita in state and local taxes. Per capita state income is $38,373. Nebraska has made slight gains in the Foundation’s rankings in recent years. In 2002, Nebraska was ranked 6th by the Tax Foundation for highest in state/local tax burden. For more detailed information, click here. Meanwhile, Nebraska’s Platte Institute published an article last week on the issue of tax flight (http://www.platteinstitute.org) stating that people and companies are more likely today to move away from states with high tax burdens than they were 20 years ago.

DAIRY INDUSTRY IN NEBRASKA

(Cattlenetwork.com) — Business, infrastructure and more will profit from an expanding dairy industry in Nebraska, according to a University of Nebraska-Lincoln dairy specialist. The increase in cow numbers will help provide milk for Nebraska's 13 dairy plants, as well as boost the economy and state's infrastructure, said Jeff Keown. Among Nebraska amenities attractive to the dairy industry are water, corn, alfalfa, ethanol plants with distillers grains byproducts for feed, and its central location on Interstate 80, two days from either coast. In Nebraska, Keown said a 500-cow dairy is a $2 million to $3 million investment, plus the per cow cost of $3,000 to $4,000. One worker is required to care for every 100 cows, with wages providing livelihoods as well as paying taxes, and supporting schools, infrastructure and businesses such as semen sales personnel and large-animal veterinarians.

GAS $10.00 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. As farmers you know only too well what this would mean to the farm economy. It would not only affect the cost of fuel, but all the other petroleum based products that are needed in farming. There is a calculator in the article that estimates your gas cost should this happen. What If Gas Cost $10 A Gallon?

RISING FEED & FUEL PRICES - JUSTIFICATION FOR LOWERING ETHANOL USE MANDATES?

I found this article in the May 29th issue of Sorghum Notes. If you are interested in Ethanol, you may want to check it out.

CALL TO ACTION: Texas Governor's Request for RFS Waiver Open for Comment in Federal Register

"On April 25, Texas Governor Rick Perry sent a letter to the Environmental Protection Agency (EPA) requesting a waiver of the Renewable Fuels Standard (RFS), citing rising feed and fuel prices as justification for lowering ethanol use mandates. The EPA has published notice of receipt of the request in the Federal Register and the notice is open for comments.

Despite the rampant negative press that ethanol is receiving right now and despite well-funded attempts to scapegoat ethanol for higher food prices and hunger around the world, numerous studies have concluded that repealing the RFS waiver will not, in fact, lead to lower food prices. An Iowa State University study even concluded that fuel would be 29 to 40 cents more expensive if ethanol were not blended into the fuel supply. Furthermore, the on-farm cost share of each dollar spent at the grocery store on food is less than 20 cents, total.

In order to preserve mandates and contribute to the maintenance and growth of the renewable fuels industry, it is vital that farmers comment in favor of biofuels in the Federal Register. Comments must be received by June 23, 2008 and should preferably be faxed or submitted electronically. Comments sent via postal mail may be delayed by Capitol Hill mail screening. The following methods may be used to submit comments:

• Web: http://www.regulations.gov/fdmspublic/component/main?main=DocumentDetail&o=09000064805f83d2 Follow the on-line instructions for submitting comments.


• E-mail: a-and-r-docket@epa.gov.


• Fax: (202) 566-1741.


• Mail: Air and Radiation Docket, Docket ID No. EPA-HQ-OAR-2008-0380, Environmental Protection Agency, Mailcode: 6102T, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include a total of two copies.

Comments must include the following identification: Docket ID No. EPA-HQ-OAR-2008-0380. Extensive directions including privacy information are available for download at http://www.sorghumgrowers.com/. For ideas or further information, please call the NSP office at (800) 658-9808."

IF YOU ARE INVOLVED IN A NON PROFIT - TAKE NOTE

If you serve on a nonprofit’s board, you should be aware of a recent law change that could put the organization’s tax exempt status at risk. Prior to this change, most exempt organizations other than churches and their affiliated entities, were required to file an annual return with the IRS. However, entities whose average gross receipts are no more than $25,000 annually have traditionally been exempt from this requirement. Beginning in 2008, that’s no longer true.

Small tax-exempt organizations must now electronically file a notice with the IRS called Form 990-N. This new form must be completed by organizations that are exempt from filing the more complex annual returns (Forms 990, 990-EZ, 990-PF, or 990-BL) because their gross income is below the filing threshold for these returns.

Although the Form 990-N should be very easy to file (the IRS refers to it as an e-postcard because it is so short), organizations that fail to file it for three consecutive years will lose their tax exempt status. The only way to regain a tax-exemption at that point will be to spend the time and expense of reapplying to the IRS—obviously not something that anyone will want to do.

The electronic form can be accessed through the IRS website (www.irs.gov/eo, which reroutes you to a third-party vendor, Urban Institute, who handles the filings for the IRS) or by going directly to the filing website: http://epostcard.form990.org. As with the information filed by large organizations, the information reported on Form 990-N will be available for the public to see. The public can view an organization’s Form 990-Ns at http://www.irs.gov/app/ePostcard/, as well as download the entire database of Form 990-Ns.

The deadline for filing Form 990-N is the 15th day of the fifth month after an organization’s year-end. Thus, for organizations using a calendar-year, the deadline for reporting 2007 information has already come and gone. However, there are no penalties for filing late as long as you don’t miss three years in a row and jeopardize the organization’s exemption. Nonetheless, it’s important to set up procedures within the organization to make sure the annual Form 990-N is filed on a regular basis as each year’s accounting is concluded. In addition, it is now more critical than ever to adequately record the organization’s gross receipts to aid in determining whether the Form 990-N or the more robust Form 990 or 990-EZ must be filed.

STROKE IDENTIFICATION - Worth Reading

I recently received this email. I thought it was worth passing on...

During a BBQ, a friend stumbled and took a little fall - she assured everyone that she was fine (they offered to call paramedics) ....she said she had just tripped over a brick because of her new shoes. They got her cleaned up and got her a new plate of food. While she appeared a bit shaken up, she went about enjoying herself the rest of the evening.

Ingrid's husband called later telling everyone that his wife had been taken to the hospital - (at 6:00 pm Ingrid passed away.) She had suffered a stroke at the BBQ.

Had they known how to identify the signs of a stroke, perhaps the victim would be with us today. Some don't die.... they end up in a helpless, hopeless condition instead. It only takes a minute to read this...

A neurologist says that if he can get to a stroke victim within 3 hours he can totally reverse the effects of a stroke... totally . He said the trick was getting a stroke recognized, diagnosed, and then getting the patient medically cared for within 3 hours, which is tough.

RECOGNIZING A STROKE

Thank God for the sense to remember the '3' steps, STR . Read and Learn! Sometimes symptoms of a stroke are difficult to identify. Unfortunately,the lack of awareness spells disaster. The stroke victim may suffer severe brain damage when people nearby fail to recognize the symptoms of a stroke. Now doctors say a bystander can recognize a stroke by asking three simple questions:

S * Ask the individual to SMILE.

T * Ask the person to TALK and SPEAK A SIMPLE SENTENCE (Coherently) (i.e. It is sunny out today)

R * Ask him or her to RAISE BOTH ARMS.

If he or she has trouble with ANY ONE of these tasks, call 911 immediately and describe the symptoms to the dispatcher.

New Sign of a Stroke -------- Stick out Your Tongue

NOTE: Another 'sign' of a stroke is this: Ask the person to 'stick' out his tongue.. If the tongue is 'crooked', if it goes to one side or the other, that is also an indication of a stroke.

I BET YOU DIDN'T KNOW THAT FERTILIZER PRICES ARE UP

(AP) -- In part because of a global surge in demand, the price of fertilizer has skyrocketed 228% since 2000, forcing U.S. farmers to switch crops, cut back on fertilizer or search for manure as a substitute. Wholesalers and retailers are scrambling to find and buy fertilizer further in advance and juggle what supplies they have to meet customers' needs. Between 2001 and 2006, global demand jumped 14%, an amount equivalent to the entire U.S. market, according to The Fertilizer Institute, a Washington D.C.-based trade group. The price increase means the cost of fertilizing an acre of average-yield U.S. corn rose from about $30 to $160. Barry Ward, extension economist for Ohio State University, said the rising fertilizer prices alone will not likely bump up food prices now at the supermarket but could in the longer term. The demand for fertilizer has been driven by an increasing world population and a growing middle class in developing nations that wants more grain-fed meat and more diverse diets. But the United States has lost more than 40% of its capacity to produce nitrogen fertilizer since 1999 because of the high cost of natural gas. Those producers have moved overseas. Some farmers have considered using manure as a substitute. The challenge is there is not enough livestock in many areas.

FARM MACHINERY DEALERS RIDING A WAVE OF PROSPERITY

(Lincoln Journal Star) -- Steve Kayton, a Case-IH dealer at Seward, and Gary Vavrina, a John Deere dealer at Clarkson, have to think back a long way to remember a time when business has been this brisk. Kayton, who is the current president of North American Ag Equipment dealers, said: "There has been a surge in farm equipment sales." Surging prices for corn, soybeans, wheat and other crops in 2007 and 2008 are largely responsible for farmers’ buying inclinations. While a slowdown is tightening its grips on much of the rest of the economy, many of the state’s grain producers seem eager to spend $250,000 for the typical combine and to plop down some extra cash for those high-tech gadgets called global positioning systems. The Milwaukee-based Association of Equipment Manufacturers, which tracks monthly sales of big-ticket farm machinery, reports a 34.6% gain in combine sales for April 2008 versus April 2007. The comparable tractor gain for two-wheel-drive models with more than 100 horsepower is 12.4%. For the year, combine sales are up about 15.9% over the first four months of 2007 and sales of bigger tractors are up about 22.5%. Andy Goodman, chief administrator for the Iowa-Nebraska Equipment Dealers Association, said the strong market is "driven by increased commodity prices and also the high tech advancements made in equipment today, because that helps create higher production.”