Questions to Ask Your Tax Professional

Tax Rates & Deductions

• What tax brackets have the biggest reduction in tax rate?
• What does it mean that federal income taxes are “progressive”?
• What is the optimum tax bracket for my operation?
• Should I pay wages to my kids for work performed on the farm?
• Should I make commodity gifts to my kids or grandkids?

Entity Structure

• Should I consider incorporating my farm operation?
• If I incorporate, should I be a C or an S corporation?
• Will a C corporation allow me to deduct my state income taxes if they exceed the $10,000 cap?
• Should I operate as a sole proprietor or set my business up as a manager of a managed LLC to reduce self-employment taxes and maximize the Section 199A deduction?

Depreciation

• Does my strategy change if I am financing the purchase of the assets?
• Does my state allow bonus depreciation or Section 179 on my purchases?
• What happens if I purchase farm assets from a related party?
• Should I consider leasing my equipment under the new tax laws?

Asset Trades (equipment, land, etc.)

• How does my state treat the trade-in of farm equipment?
• What is the tax effect of trading land with or without improvements?

Business Loss Treatment

• Is it better to report some income to maximize the use of the standard deduction and child tax credits?
• How do net operating losses affect my self-employment income?

Fringe Benefits

• Should I incorporate to provide tax-free fringe benefits for housing and meals to me as an owner?
• What are the details needed to provide for these tax-free fringe benefits?
• If the meals deduction is eliminated in 2026, is it worth doing?

Estate Tax

• Should I make major gifts between now and 2025, when the rules are scheduled to change again?
• Does my state have an estate tax and if so, does it exempt farm property?
• Should I transfer my farm assets into an entity to provide for tax reductions?