For many farm and ranch families, bringing children or grandchildren into the operation is the ultimate goal. Successfully bringing additional family members into the operation may require some creativity as all parties need to maintain a viable standard of living. This is the first in a series of articles that will highlight ideas and tactics for bringing another family member into the operation. One tactic is to provide new family members with monetary compensation, such as an hourly wage or salary. The total compensation should be comparable to the market value of wages to hire a non-family member to do the same work.
{"title":"Paying Family Members on the Farm or Ranch","authors":"Jessica Groskopf","doi":"10.32873/unl.dc.cap028","DOIUrl":"https://doi.org/10.32873/unl.dc.cap028","url":null,"abstract":"For many farm and ranch families, bringing children or grandchildren into the operation is the ultimate goal. Successfully bringing additional family members into the operation may require some creativity as all parties need to maintain a viable standard of living. This is the first in a series of articles that will highlight ideas and tactics for bringing another family member into the operation.\u0000\u0000One tactic is to provide new family members with monetary compensation, such as an hourly wage or salary. The total compensation should be comparable to the market value of wages to hire a non-family member to do the same work.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"47 11","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139780227","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Planning, or more specifically, strategic planning, is a process of defining long-term goals and objectives of an organization and determining the best course of action to achieve them. It involves such steps as defining the current situation, identifying strengths, weaknesses, opportunities, and threats, and developing a plan of action to take advantage of opportunities and overcome challenges. Parsons (2018) outlined six key components of a business plan and why a farm or ranch should make the effort to develop a business plan.
{"title":"The Importance of Strategic Planning for Farmers and Ranchers","authors":"Larry Van Tassell","doi":"10.32873/unl.dc.cap027","DOIUrl":"https://doi.org/10.32873/unl.dc.cap027","url":null,"abstract":"Planning, or more specifically, strategic planning, is a process of defining long-term goals and objectives of an organization and determining the best course of action to achieve them. It involves such steps as defining the current situation, identifying strengths, weaknesses, opportunities, and threats, and developing a plan of action to take advantage of opportunities and overcome challenges. Parsons (2018) outlined six key components of a business plan and why a farm or ranch should make the effort to develop a business plan.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"38 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139683645","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
According to USDA, only 40% of farm households participate in some type of retirement account. For self-employed farmers and ranchers without full-time employees, the opportunity to invest in a One-Participant 401(k) plan is a way to (1) save money for retirement, (2) reduce taxable income, and (3) provide the potential option to borrow from the plan. This series of articles will review these features. What is a One-Participant 401(k)? The One-Participant 401(k)is a qualified retirement plan designed specifically for business owners with no full-time employees other than the business owners and their spouses. Visit with your financial planner and tax advisor if you have part-time employees and are considering establishing a 401(k) for your business to make sure you comply with 401(k) funding rules.
{"title":"One-Participant 401(k) as a Tool for Farmers and Ranchers","authors":"Jessica Groskopf, Cory Walters, Doug Nelson","doi":"10.32873/unl.dc.cap025","DOIUrl":"https://doi.org/10.32873/unl.dc.cap025","url":null,"abstract":"According to USDA, only 40% of farm households participate in some type of retirement account. For self-employed farmers and ranchers without full-time employees, the opportunity to invest in a One-Participant 401(k) plan is a way to (1) save money for retirement, (2) reduce taxable income, and (3) provide the potential option to borrow from the plan. This series of articles will review these features. What is a One-Participant 401(k)? The One-Participant 401(k)is a qualified retirement plan designed specifically for business owners with no full-time employees other than the business owners and their spouses. Visit with your financial planner and tax advisor if you have part-time employees and are considering establishing a 401(k) for your business to make sure you comply with 401(k) funding rules.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"17 7","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139168976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The adage that farmers and ranchers are often asset-rich and cash poor does indeed appear to be true! According to the United States Department of Agriculture (USDA), just forty percent of farmers contribute to a retirement plan. And because many farmers and ranchers invest profits in their business rather than take a high salary, they show little income on their tax returns. This means they will have paid less into Social Security and their benefits will be lower when they retire. This can create cash flow challenges, especially for an older generation of farm and ranch families wanting to bring the next generation into the operation and keep the business going. For self-employed farmers and ranchers without full-time employees, the opportunity to invest in a One-Participant 401(k) plan is a way to (1) save money for retirement, (2) reduce taxable income, (3) provide the potential option to borrow from the plan. This series of articles will review these features. This article focuses on saving for retirement and reducing tax liability.
{"title":"One-Participant 401(k): Saving for Retirement and Reducing Taxes","authors":"Jessica Groskopf, Cory Walters, Doug Nelson","doi":"10.32873//unl.dc.cap026","DOIUrl":"https://doi.org/10.32873//unl.dc.cap026","url":null,"abstract":"The adage that farmers and ranchers are often asset-rich and cash poor does indeed appear to be true! According to the United States Department of Agriculture (USDA), just forty percent of farmers contribute to a retirement plan. And because many farmers and ranchers invest profits in their business rather than take a high salary, they show little income on their tax returns. This means they will have paid less into Social Security and their benefits will be lower when they retire. This can create cash flow challenges, especially for an older generation of farm and ranch families wanting to bring the next generation into the operation and keep the business going.\u0000\u0000For self-employed farmers and ranchers without full-time employees, the opportunity to invest in a One-Participant 401(k) plan is a way to (1) save money for retirement, (2) reduce taxable income, (3) provide the potential option to borrow from the plan. This series of articles will review these features. This article focuses on saving for retirement and reducing tax liability.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"87 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138954287","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Estate and transition planning often focuses on what happens to the farm or ranch at the death of a key person. However, a good estate and transition plan should also include contingencies for disability. Planning for a disability is not an easy task because the severity and duration of the disability are unknown. This article offers some key items to have in place to protect you and your operation from disability.
{"title":"What Happens to Your Farm or Ranch if You Become Disabled?","authors":"Jessica Groskopf","doi":"10.32873/unl.dc.cap024","DOIUrl":"https://doi.org/10.32873/unl.dc.cap024","url":null,"abstract":"Estate and transition planning often focuses on what happens to the farm or ranch at the death of a key person. However, a good estate and transition plan should also include contingencies for disability. Planning for a disability is not an easy task because the severity and duration of the disability are unknown. This article offers some key items to have in place to protect you and your operation from disability.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"7 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138979420","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cow-calf producers are always looking at ways to cut costs and improve profits. Looking at recent data from the University of Minnesota Center for Financial Management, FINBIN Livestock Analysis for 2022 representing cow-calf operations from Nebraska, South Dakota, and North Dakota can provide producers with some ideas on ways to improve profitability.
{"title":"What Did Higher Profit Cow-Calf Producers Do to Be More Profitable?","authors":"Randy Saner","doi":"10.32873/unl.dc.cap023","DOIUrl":"https://doi.org/10.32873/unl.dc.cap023","url":null,"abstract":"Cow-calf producers are always looking at ways to cut costs and improve profits. Looking at recent data from the University of Minnesota Center for Financial Management, FINBIN Livestock Analysis for 2022 representing cow-calf operations from Nebraska, South Dakota, and North Dakota can provide producers with some ideas on ways to improve profitability.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138596481","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As the fall harvest nears and we’re tuning up our equipment, the thought of custom hiring out our harvesting work comes to mind for some. There are many factors to consider as we make custom hire versus ownership decisions, with cost considerations generally at the forefront of our thoughts.
{"title":"Harvest Operations - Own it or Hire it?","authors":"","doi":"10.32873/unl.dc.cap012","DOIUrl":"https://doi.org/10.32873/unl.dc.cap012","url":null,"abstract":"As the fall harvest nears and we’re tuning up our equipment, the thought of custom hiring out our harvesting work comes to mind for some. There are many factors to consider as we make custom hire versus ownership decisions, with cost considerations generally at the forefront of our thoughts.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125146618","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
On Aug. 17, 2023, the USDA National Agricultural Statistics Service (NASS) released its “Technology Use (Farm Computer Usage and Ownership)” survey. According to the survey, 77% of Nebraska farmers and ranchers own or use desktop or laptop computers. That is up from 74% in 2021. Similarly, 85% own or use a smartphone, which is up from 80% in 2021. Farmers and ranchers in Nebraska are above the U.S. average in computer use as 69% of producers in the U.S. own or use a personal computer and 82% own or use a smartphone. Interestingly, 90% of farms in Nebraska reported they had internet access, just over the 85% of farms throughout the U.S. How many of these electronic devices are used for conducting farm or ranch business? Nearly 40% of respondents stated they purchased agricultural inputs over the internet (up from 31% in 2021), and 31% stated they conducted agricultural marketing activities over the internet. Approximately 25% accessed USDA/NASS reports or other USDA services over the internet, while 27% conducted business with any USDA website. This compares with 62% of respondents that conduct business with any non-agricultural website.
{"title":"Technology Use Growing on Nebraska Farms and Ranches","authors":"","doi":"10.32873/unl.dc.cap011","DOIUrl":"https://doi.org/10.32873/unl.dc.cap011","url":null,"abstract":"On Aug. 17, 2023, the USDA National Agricultural Statistics Service (NASS) released its “Technology Use (Farm Computer Usage and Ownership)” survey. According to the survey, 77% of Nebraska farmers and ranchers own or use desktop or laptop computers. That is up from 74% in 2021. Similarly, 85% own or use a smartphone, which is up from 80% in 2021. Farmers and ranchers in Nebraska are above the U.S. average in computer use as 69% of producers in the U.S. own or use a personal computer and 82% own or use a smartphone. Interestingly, 90% of farms in Nebraska reported they had internet access, just over the 85% of farms throughout the U.S.\u0000\u0000\u0000How many of these electronic devices are used for conducting farm or ranch business? Nearly 40% of respondents stated they purchased agricultural inputs over the internet (up from 31% in 2021), and 31% stated they conducted agricultural marketing activities over the internet. Approximately 25% accessed USDA/NASS reports or other USDA services over the internet, while 27% conducted business with any USDA website. This compares with 62% of respondents that conduct business with any non-agricultural website.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"576 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134018506","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Some farm leases are not written but are verbal or "handshake" agreements. Because nothing is in writing, the parties may have different recollections of their agreement, making lease disputes more difficult to resolve. The most common legal issue associated with verbal farm leases is how a lease may legally be terminated. For verbal leases, six months advance notice must be given to legally terminate the lease. In contrast, the termination of a written lease is determined by the terms of the written lease. If the lease does not address termination, the lease automatically terminates on the last day of the lease.
{"title":"Terminating a Verbal Farmland Lease in Nebraska","authors":"","doi":"10.32873/unl.dc.cap010","DOIUrl":"https://doi.org/10.32873/unl.dc.cap010","url":null,"abstract":"Some farm leases are not written but are verbal or \"handshake\" agreements. Because nothing is in writing, the parties may have different recollections of their agreement, making lease disputes more difficult to resolve. The most common legal issue associated with verbal farm leases is how a lease may legally be terminated. For verbal leases, six months advance notice must be given to legally terminate the lease. In contrast, the termination of a written lease is determined by the terms of the written lease. If the lease does not address termination, the lease automatically terminates on the last day of the lease.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"143 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114014518","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In 2023, the Nebraska Legislature passed a bill that allows a partnership or S-Corp to elect to pay its state income taxes. Previously, because the income from the partnership or S-Corp is passed through to the owner, the owners of the entity paid the taxes at their own individual tax level. In 2018, the federal government passed the Tax Cuts and Jobs Act (TCJA), which limited the itemized deduction for state and local taxes in the individual’s return to $10,000. This prompted many states to adopt laws like the new Nebraska law to work around this limitation. Federal tax law allows entities to deduct state income taxes paid as an ordinary business expense, but for most states this has only been allowed for C-corporations since they are the only entity to pay their own taxes. The pass-through entity tax law expands that option.
{"title":"Nebraska Approves Pass-Through Entity Tax Bill","authors":"","doi":"10.32873/unl.dc.cap009","DOIUrl":"https://doi.org/10.32873/unl.dc.cap009","url":null,"abstract":"In 2023, the Nebraska Legislature passed a bill that allows a partnership or S-Corp to elect to pay its state income taxes. Previously, because the income from the partnership or S-Corp is passed through to the owner, the owners of the entity paid the taxes at their own individual tax level. \u0000\u0000In 2018, the federal government passed the Tax Cuts and Jobs Act (TCJA), which limited the itemized deduction for state and local taxes in the individual’s return to $10,000. This prompted many states to adopt laws like the new Nebraska law to work around this limitation. Federal tax law allows entities to deduct state income taxes paid as an ordinary business expense, but for most states this has only been allowed for C-corporations since they are the only entity to pay their own taxes. The pass-through entity tax law expands that option.","PeriodicalId":118160,"journal":{"name":"Center for Agricultural Profitability","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115868024","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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