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What to know on taxes
Story Date: 12/19/2017
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Source: POLITICO'S MORNING AGRICULTURE, 12/18/17
The compromise tax bill, H.R. 1 (115), contains several provisions that would affect farmers, ranchers and agricultural operations.
Some of the pros and cons for the ag industry include:
- Deductions for pass-throughs. The 20 percent deduction for owners of pass-through businesses would apply to the first $315,000 of joint income. The vast majority of farms are structured as pass-throughs. They account for 85 percent of U.S. agricultural production, according to USDA data.
- For co-ops, a repeal but an offset: Although the Section 199 deduction used by ag cooperatives would be repealed in the new bill, Sens. John Hoeven (N.D.) and John Thune (S.D.) got in a provision to offset some of their lost benefits. Farmer-members could claim a new 20 percent deduction on payments from cooperatives. The cooperatives themselves could claim that deduction on gross income minus payments to members, with certain limitations.
- Restricting operating loss deduction. The bill would repeal "carryback" provisions for net operating losses, but make an exception for farming. The deduction would be limited to 80 percent of taxable income and applicable to the previous two years, starting in 2018. Carryforwards would be permitted indefinitely.
Making sense of it all: Read up on the other details about what's in the bill for ag in this article by Catherine and Helena.
- House Speaker Paul Ryan told Republican lawmakers on a phone call that the House will vote on the plan Tuesday, before the Senate, POLITICO reports.
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