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Nation, World Ag News
Friday, 14 December 2012 14:14
By Hayleigh Colombo
Journal & Courier
LAFAYETTE, Ind. (AP) — West Central Indiana farmers say they have a lot to lose should the nation go over the so-called fiscal cliff, a set of automatic spending cuts and tax hikes set to take effect in January unless the White House and Republicans negotiate a compromise.
Many are rushing to pass their farmland down to children or grandchildren before the year is up. If the nation dives, their relatives may endure a steep inheritance tax hike.
Set to expire at the end of the year is a 35 percent tax on estates of more than about $5 million. The tax would increase to 55 percent on estates worth $1 million.
"It's a very big concern for the farm community as a whole," Fred Reichart, a Lafayette grain farmer, told the Journal & Courier (http://on.jconline.com/12o34q0 ).
Jeff Milligan, owner of Monticello-based CPA firm Baker Milligan, said farmers are rushing to take advantage of the $5 million no-tax ceiling. Milligan expects Congress to settle on a $3.5 million ceiling or similar compromise.
"It's an absolutely huge difference, going forward now or waiting," Milligan said. "They'd rather do what's safe than take a chance."
Complicating matters: Average-quality farmland in the area increased its value this year by nearly 20 percent, according to an annual Purdue University farmland survey, to $7,475 per acre. Top-quality land is $8,949. Poor-quality land is $6,121 per acre.
That's a good thing, Milligan said, until smaller players suddenly are bit by big taxes.
"The higher value of farmland has basically taken smaller farms that were normally not an issue and made them an issue," he said.
The issue is striking a chord with farmers who want to make sure their children are set up financially when they pass away.
Philip N. Burket of Lafayette said since his children live about 12 hours away from his farm, what he'd be passing down to them is the monetary value of the farm, so he'd like to maximize it.
"To me, land is the most important thing to have," Burket said. "I guess I've got the farmer's soil under my fingernails and neither of my children has that. What I'd want is to leave the most to them as possible."
Richard Beesley of Beesley Farms in Thornton, said he's glad the dilemma doesn't apply to him.
"We own 180 acres of corn and soybeans," Beesley said. "We don't own that much acreage, so that's one way around it. We're pretty much set up right now."
Reichart, the Lafayette grain farmer, said besides contacting legislators, there's not much farmers can do at this point.
"All you can hope is that better judgment prevails," he said.