Recent developments in self-employment tax of farmers

Article Abstract:

Planning alternatives exist to reduce the self-employment taxation of farmers, but many farm activities do give rise to social security and FICA taxation. Farm landlord-tenant agreements should be drafted to minimize the likelihood that farm landlord's income is treated as self-employment income because of material participation. Government subsidies, agistment and custom farming can all give rise to self-employment income. Aggressive tax planning through payments or gifts of commodities to family members can be attempted, but IRS challenge would be likely.

Farmers

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Recent developments in agribusiness taxation

Article Abstract:

Farmers should be aware of a number of aggressive positions taken by the IRS on accounting method changes, self-employment tax and alternative minimum taxation (AMT) of deferred payment contracts. Congress is considering overriding the IRS position that deferred payment contracts are installment sales contracts that are impermissible for AMT purposes. The IRS has agreed not to audit returns take this position on deferred sales. The IRS also disallowed the use of a farm partnership to reduce self-employment taxation.

Agriculture, Crop Production, Public Finance Activities, Corporate Income Taxes, Cases, Tax accounting, Surveys, Farms, Minimum tax

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Recent developments in agribusiness taxation

Article Abstract:

Several changes were made to Tax Code provisions and regulations regarding the farming industry in 1998. The Taxpayer Relief Act of 1997 added favorable income averaging and alternative minimum tax provisions. IRS final and temporary regulations were issued which provide guidance on production of property. The IRS's application of self-employment tax rules will continue to be stringent. Reference to advise given on these issues may be useful.

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