we would have liked to have seen extended, but this was a tax pack- age compromise and they had to fi nd something that could fi t within the limits of what we could afford right now.” Like the expanded Section 179
schedule, the 50 percent bonus depreciation is only on the books through 2013.
Paying for ObamaCare The capital gains rate increase
that was already scheduled from 15 percent to 20 percent will only go into effect for those households with incomes higher than $400,000 for an individual, $450,000 for a couple — the same earners who will see their top income tax rate go up 3.6 percent to 39.6 percent. Bacus is concerned the capital gain hike will restrict opportunities to invest in or sell properties. “I don’t know
that it’s going to have a very positive impact on the economy,” he says. There’s an additional tax in-
crease in 2013 that will affect people who are fi ling jointly with incomes more than $250,000 and as indi- viduals with more than $200,000. Those taxpayers will pay a “Medi- care surtax” of 3.8 percent on divi- dends and capital gain income. “That’s going to help pay for the
Affordable Care Act, more com- monly known as ObamaCare,” ex- plains Childs. That, added to the capital gains increase, may require a change in strategy. “Typically we in agriculture try
to manage such that we minimize taxable income in any year and keep pushing it forward,” Childs says, “but this year may be a time to change that thought process and recognize more gain this year in this lower tax rate time period than
to push it forward and have to pay a higher tax in 2014 and beyond.”
Drought-induced livestock sales Many producers, of course, are
still wrestling with drought and the repercussions of forced liquidation of livestock. Two long-standing sections of
the Internal Revenue Code allow them to defer income on those sales. Section 451 lets full-time producers postpone returns on raised livestock for a year. Under section 1033, pro- ducers can exempt income from sold breeding stock provided the animals are replaced within 2 years of the end of the tax year — 4 years if the area has been declared a fed- eral disaster. Childs points out Texas received
disaster designations in both 2011 and 2012. “In both cases,” he says,
The Black Hereford Sale •
Diamond W Arena, Alvarado, TX • Auctioneer: Doak Lambert Join us the night before for dinner and entertainment. View cattle in the afternoon.
Many are homozygous black. Call for catalog.
From these consignors: D Bar T Ranch, J-B Cattle Co., Escondido Ranches, Rose Ridge Farms, Triple L Ranch, Bobby Watson and YJA Ranch.