NEW BUILDING - WRITE OFF

Q. I put a deposit on a building in August of 2011 thinking that it would completed by the end of the year. The builder has not started the building yet and says it will most likely be completed mid February, depending on the weather. I paid for it in 2011 thinking I can write the building off. Now in reading your blog I understand that I can’t write it off in 2011?

A. In order for a farmer to construct a new farm building in 2011 and be able to take 100% bonus depreciation on the building your must meet two tests. First, you must have paid for, or have a financial obligation to pay for and secondly it must be available to place in service. In your case you meet test one but not test two so you do not qualify for the deduction in 2011.

In your case, since the construction was not finished by year-end, then 50% bonus depreciation will apply in 2012, not the 100% bonus depreciation of 2011.

Sorry.

TAX PLANNING OPPORTUNITY - 2% PAYROLL TAX WAIVER

Throughout 2011, as a method of stimulating consumer spending, Congress had reduced the employee share of the Social Security tax, as well as the self-employment tax rate, by 2%. But when it came time to extend this cut for 2012, Congress could not agree on how to pay for a full one-year extension. As a result, the 2% cut is only officially in the law at this point through February 29, 2012.

If Congress does not agree on an extension for the full year, there is a small planning point for those who are employees of their own corporation, or who issue occasional salary checks to family members for their services in the business.

In order to receive the 2% waiver, payroll must be issued in the first two months of 2012. And to maximize the savings, the worker must receive at least $18,350 of compensation in the first two months of the year ($18,350 is 1/6th of the $110,100 maximum amount subject to Social Security tax in 2012). So for those who only draw an occasional paycheck from their business, such as an S corporation or a C corporation, there is a tax savings (albeit under $400) if roughly $18,000 of that payroll is drawn within the first two months of 2012.

But note: If Congress extends the 2% cut for all of 2012, this becomes a moot point.

QUESTION FROM A MISCLASSIFIED WORKER

Q. I am definitely an employee at my job but, my employer did not withhold anything and instead of giving me a W-2 like he should have he gave me a 1099. Last year he gave me a W-2. Now not only do I owe a bunch of tax I also have to pay both halves of the Social Security and Medicare tax. This is not fair. Is there anything I can do?

A. Yes there is something you can do to cut your Social Security and Medicare in half. Since 2007, you are allowed to file a Form 8919M Uncollected Social Security and Medicare Tax on wages instead of filing Schedule SE. The form SE charges you tax at 15.3% versus the 7.65%.

There are some codes on the form that you will need to review and if you meet one of the criteria, walla you qualify.

By the way, this IRS may be visiting your employer. He will at least be getting a bill from the IRS for his 1/2.

JUST FOR FUN - MY HIGH SCOOL ENGLISH TEACHER WOULD LOVE THIS

Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo

Believe it or not, this sentence is grammatically correct and has meaning: “Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo.” First devised by professor William J. Rapaport in 1972, the sentence uses various meanings and parts of speech for the term “buffalo” (and its related proper noun “Buffalo”) to make an extremely hard-to-parse sentence. Although most people know “buffalo” as both a singular and plural term for bison, and “Buffalo” as a city in New York, “buffalo” is also a verb meaning “to bully, confuse, deceive, or intimidate.”

Using these definitions, Wikipedia suggests the sentence can be read: [Those] (Buffalo buffalo) [whom] (Buffalo buffalo buffalo) buffalo (Buffalo buffalo).

Still too hard to follow for those of us who don’t know “buffalo” as a verb. Refine once more: [Those] buffalo(es) from Buffalo [that are intimidated by] buffalo(es) from Buffalo intimidate buffalo(es) from Buffalo.

And once more: Bison from Buffalo, New York who are intimidated by other bison in their community also happen to intimidate other bison in their community.

Wikipedia has further explanation, including the slightly frightening note: Buffalo is not the only word in English for which this kind of sentence can be constructed; any word which is both a plural noun and a plural form of a transitive verb will do.
Other examples include dice, fish, right and smelt.
Beware of Buffalo buffalo, buffalo, for they may buffalo you.

SPENDING

Please take a moment to watch this video about spending: WATCH ME

MARTIN LUTHER KING DAY

Be inspired!

Martin Luther King - I HAVE A DREAM

2012 NEBRASKA AG CLASSIC

I was honored to speak at the Nebraska Ag Classic this past week in Kearney. The wealth of knowledge by all the speakers and the great information from the sponsors is a true credit to the Committee and sponsors. It is always wonderful to see old friends and meet new ones.

If you would like a copy of the PowerPoint from the conference please email us and we will send it to you.

OR if you would like me to speak at a conference that you go to, please let us know.


Thank you again to the NE Ag Classic Committee!