Below is a letter to our clients on Pretax Appointments. Several of our Ag clients have scheduled appointments before harvest to make sure they are doing everything possible to minimize their taxes.
As your tax advisor, we think it is very important for you to meet with us as soon as possible to discuss the income tax consequences for 2008. Because of this, we are setting up appointments to make sure we have time available to accommodate all of our farm clients. We will send out an appointment card in the next week or so to see if we can get you in to meet with us prior to harvest. If the time and/or date does not work for you, please feel free to contact us to change the appointment.
You might be asking why we are advising you to come in for an extra appointment this year. A few years ago, there was a movie starring George Clooney called “The Perfect Storm.” In the movie, George Clooney’s character operated a fishing boat. Out of financial desperation, he took his boat and crew out further than usual to try to make the big catch of fish. Unfortunately for him and his crew, the area where he was in was the spot where three major storms were converting. As you might imagine, this “Perfect Storm” came right on top of his ship and the entire crew was lost at sea.
From an income tax standpoint, it appears that our farm clients are experiencing this “Perfect Storm.” Maybe I should say “Un-Perfect Storm.” We have already met with several of our farm clients to help minimize their tax situation for 2008 and 2009.
The “Perfect Storm/Un-Perfect Storm” items that you are facing are:
· Higher grain prices therefore higher income
· Tax consequences of futures/spec contracts.
· A one time opportunity that you have to pay tax at a lower capital gains rates.
· Lower interest rates available on loans between related parties.
· A window of opportunity for those people that owe money to their corporations to pay that money back at low rates.
· A one time opportunity to strip money from your corporation at a low rate.
If that were not enough, we have the unknown factor of what the income tax system will look like after the 2008 presidential election. We will not know the status of this until after November 4th. This unknown factor is going to make us create variables in our tax plan. We do not think that you will have time to react is we wait until after the election. Unfortunately our crystal ball is now working so all we can do is plan. If Obama should prevail, he has promised that he will be increasing income taxes. This has a huge impact on you, our farm clients. Higher rates along with the increase in capital gains rates that he is proposing makes planning for 2008 very important
As your tax advisor, it is important for us to make sure that we are helping you structure your transactions in such a way that you can minimize taxes and, at the same time, meet your financial objectives. We look forward to meeting with you.
Larry Kopsa, CPA
You might be asking why we are advising you to come in for an extra appointment this year. A few years ago, there was a movie starring George Clooney called “The Perfect Storm.” In the movie, George Clooney’s character operated a fishing boat. Out of financial desperation, he took his boat and crew out further than usual to try to make the big catch of fish. Unfortunately for him and his crew, the area where he was in was the spot where three major storms were converting. As you might imagine, this “Perfect Storm” came right on top of his ship and the entire crew was lost at sea.
From an income tax standpoint, it appears that our farm clients are experiencing this “Perfect Storm.” Maybe I should say “Un-Perfect Storm.” We have already met with several of our farm clients to help minimize their tax situation for 2008 and 2009.
The “Perfect Storm/Un-Perfect Storm” items that you are facing are:
· Higher grain prices therefore higher income
· Tax consequences of futures/spec contracts.
· A one time opportunity that you have to pay tax at a lower capital gains rates.
· Lower interest rates available on loans between related parties.
· A window of opportunity for those people that owe money to their corporations to pay that money back at low rates.
· A one time opportunity to strip money from your corporation at a low rate.
If that were not enough, we have the unknown factor of what the income tax system will look like after the 2008 presidential election. We will not know the status of this until after November 4th. This unknown factor is going to make us create variables in our tax plan. We do not think that you will have time to react is we wait until after the election. Unfortunately our crystal ball is now working so all we can do is plan. If Obama should prevail, he has promised that he will be increasing income taxes. This has a huge impact on you, our farm clients. Higher rates along with the increase in capital gains rates that he is proposing makes planning for 2008 very important
As your tax advisor, it is important for us to make sure that we are helping you structure your transactions in such a way that you can minimize taxes and, at the same time, meet your financial objectives. We look forward to meeting with you.
Larry Kopsa, CPA
