Tax credits can be gained from year-end pre-pays of seed, fertilizer, chemicals and farm equipment, but farmers need to keep in mind there are rules that are in effect. And you are an unsecured creditor, so make sure your business partners are trustworthy and on sound financial footing.
Paul Nieffer, the Farm CPA, offer these tips as you make plans for your year-end purchases.
- Make sure it’s not considered a deposit. Make sure there are specific terms for the specific product and amount you’re prepaying.
- If the company you pre-pay to goes out of business, you are an unsecured creditor and getting that money back is not a sure thing.
- If you make equipment purchases at the end of the year, the equipment must be in your possession to take advantage of tax benefits.
Check out AgWeb’s Tax Page here.
