RANCHING Business
Tax Tool
Start 2014 right with a handy spreadsheet for ranch expenses, income By Gary DiGiuseppe
D
R. JASON BANTA DIDN’T CREATE HIS CATTLE ENTERPRISE income and expense spreadsheet as a tax tool. But
it’s certainly worked out that way. In fact, the associate professor and Extension beef
cattle specialist at the Texas AgriLife Research and Extension Center in Overton originally developed the spreadsheet for use on his own family’s cow-calf op- eration in Axtell. “I built it for us to use, and then started using it in
talks from time to time from an Extension standpoint, just what kind of recordkeeping things you can keep in mind,” he explains. “It was one of the things that I showed a few producer groups, and they seemed to really like that idea.” The spreadsheet, which was constructed using
Microsoft’s Excel program, addresses a need. “Gen- erally, most producers don’t do a very good job of keeping track of expenses,” Banta concedes. “The bigger operations, and some of the better producers, are doing it as they go along, but unfortunately for a lot of people it’s more of an afterthought rather than a proactive way to know where you’re at throughout the year.” By using the spreadsheet to enter expenses as they’re
incurred, a producer can keep a running total. Each expense and the date are entered into the far left hand column. Each of the remaining columns on the page corresponds with a category for Schedule F, the Internal Revenue Service’s form to register profi t or loss from farming. The spreadsheet will provide a total for all expenses, and also subtotals for some of the expense categories on Schedule F — car and truck expenses, chemicals, conservation expenses, custom hire, all the way down through taxes, utilities, and veterinary, breeding and medicine expenses. Banta only included the categories of expenses most ranchers would use in the template, but notes, “The spreadsheet is built to
30 The Cattleman January 2014
where you can go in there, customize it and add other lines or columns if you need to.” The producer can also use the spreadsheet to keep
and follow a budget, which was its initial purpose. “Let’s say for 2013 you budgeted $18,000 in fertilizer, and we look on Oct. 1 and you’ve spent $16,600 on fertilizer,” Banta says. “You realize you’ve got X amount left to fi ll in on
your budget, or you can go ahead and spend it and still be within your budget. Or maybe you realize that it’s Oct. 16 and you budgeted $18,000, and you’ve already spent $21,000 on fertilizer … I think there are always some producers out there at the end of the year who, when they start totaling up how much they actually spent, are surprised at how much they actually spent and in certain areas how much money they spent. It can be eye-opening to some.” Up until this past fall, the spreadsheet had been
distributed for public use via email. It can now be downloaded from the Texas A&M beef cattle website (
http://animalscience.tamu.edu/fi les/2012/04/Copy-of- Record-Keeping-Examples.xlsx) and modifi ed to meet the individual producer’s specifi cations. “It was designed to be a recordkeeping tool, and
just one component of a whole cow-calf recordkeep- ing system,” says Banta. “I really like it because at any point in time, I can see how much expense we have in various categories. Based on that, I can make management adjustments if I need to, so it’s been very helpful. Then, if you input those expenses and receipts as they occur, at the end of the year you already have all that information put together, so you’re not going back and hunting for it.” Some ranchers, he says, are more comfortable work-
ing with computers than others, and you could write the information on a pad and paper if you wanted to, but using it on a simple spreadsheet system makes it easier.
thecattlemanmagazine.com
Form
4797
Department of the Treasury Internal Revenue Service
Name(s) shown on return
1 Enter the gross proceeds from sales or exchanges reported to you for 2012 on Form(s) 1099-B or 1099-S (or substitute statement) that you are including on line 2, 10, or 20 (see instructions) . . . . . . . .
SCHEDULE F (Form 1040)
Department of the Treasury Internal Revenue Service (99)
Name of proprietor 2 A Principal crop or activity
(a) Description of property
Profit or Loss From Farming
Part I Sales or Exchanges of Property Used in a Trade or Business and Involuntary Conversions From Other Than Casualty or Theft—Most Property Held More Than 1 Year (see instructions)
▶ Attach to Form 1040, Form 1040NR, Form 1041, Form 1065, or Form 1065-B. ▶ Information about Schedule F and its separate instructions is at
www.irs.gov/schedulef.
1
(b) Date acquired (mo., day, yr.)
(c) Date sold (mo., day, yr.)
B Enter code from Part IV ▶
(d) Gross sales price
(e) Depreciation allowed or
allowable since acquisition
(f) Cost or other basis, plus
C Accounting method: Cash
Accrual
E Did you “materially participate” in the operation of this business during 2013? If “No,” see instructions for limit on passive losses F Did you make any payments in 2013 that would require you to file Form(s) 1099 (see instructions)? . . . . . . . . . G If “Yes,” did you or will you file required Forms 1099? . . . . . . . . . . . . . . . . . . . . . .
3 Gain, if any, from Form 4684, line 39 . . . . . . . . . . . . . . . . . . . . . . . . 1a
2
4 Section 1231 gain from installment sales from Form 6252, line 26 or 37 . . . . . . . . . . . . . . 5 Section 1231 gain or (loss) from like-kind exchanges from Form 8824 . . . . . . . . . . . . . . 6 Gain, if any, from line 32, from other than casualty or theft. . . . . . . . . . . . . . . . . . 7 Combine lines 2 through 6. Enter the gain or (loss) here and on the appropriate line as follows: . . . . . . .
Partnerships (except electing large partnerships) and S corporations. Report the gain or (loss) following the instructions for Form 1065, Schedule K, line 10, or Form 1120S, Schedule K, line 9. Skip lines 8, 9, 11, and 12 below.
3a Cooperative distributions (Form(s) 1099-PATR) . 4a Agricultural program payments (see instructions)
. 6
3a 4a
8 Nonrecaptured net section 1231 losses from prior years (see instructions) . . . . . . . . . . . . . 6d Amount deferred from 2012
losses, or they were recaptured in an earlier year, enter the gain from line 7 as a long-term capital gain on the Schedule D filed with your return and skip lines 8, 9, 11, and 12 below. a
5b
9 Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, enter the gain from line 7 on line 12 below. If line 9 is more than zero, enter the amount from line 8 on line 12 below and enter the gain from line 9 as a long-term capital gain on the Schedule D filed with your return (see instructions) . . . . . . . . . . . . . .
Amount received in 2013 . . . . . . . c If election to defer to 2014 is attached, check here ▶
Part II Ordinary Gains and Losses (see instructions) 10 Ordinary gains and losses not included on lines 11 through 16 (include property held 1 year or less):
7 8 9
10
12 Gain, if any, from line 7 or amount from line 8, if applicable . . . . . . . . . . . . . . . . . 26
11 Loss, if any, from line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13 Gain, if any, from line 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11 12 13 14
15 Ordinary gain from installment sales from Form 6252, line 25 or 36 . . . . . . . . . . . . . . . 29
14 Net gain or (loss) from Form 4684, lines 31 and 38a . . . . . . . . . . . . . . . . . . . 28
Depreciation and section 179 expense (see instructions) .
15
17 Combine lines 10 through 16 . . . . . . . . . . . . . . . . . . . . . . . . . . Veterinary, breeding, and medicine
14
16 Ordinary gain or (loss) from like-kind exchanges from Form 8824. . . . . . . . . . . . . . . . 30
18 For all except individual returns, enter the amount from line 17 on the appropriate line of your return and skip lines a and b below. For individual returns, complete lines a and b below:
a If the loss on line 11 includes a loss from Form 4684, line 35, column (b)(ii), enter that part of the loss here. Enter the part of the loss from income-producing property on Schedule A (Form 1040), line 28, and the part of the loss from property used as an employee on Schedule A (Form 1040), line 23. Identify as from “Form 4797, line 18a.” See instructions . . b Redetermine the gain or (loss) on line 17 excluding the loss, if any, on line 18a. Enter here and on Form 1040, line 14
16 17 18 19 20 21
22
Employee benefit programs other than on line 23 . . . Feed . . . . . . . Fertilizers and lime . . . Freight and trucking . . . Gasoline, fuel, and oil . . . Insurance (other than health) Interest:
For Paperwork Reduction Act Notice, see separate instructions. 22
a Mortgage (paid to banks, etc.) b Other . . . . . . . Labor hired (less employment credits)
21a 21b
15 16 17 18 19 20
a b c d e f
Cat. No. 13086I
Net farm profit or (loss). Subtract line 33 from line 9 . . . . . . . . . . . . . . . . If a profit, stop here and see instructions for where to report. If a loss, complete lines 35 and 36.
All investment is at risk. Some investment is not at risk.
31 32
Other expenses (specify):
18a 18b
32a 32b 32c 32d 32e 32f
33 Total expenses. Add lines 10 through 32f. If line 32f is negative, see instructions . . . . . . . ▶ 33 34
35 36
a 34
Did you receive an applicable subsidy in 2013? (see instructions) . . . . . . . . . . . . . . . . . Yes No Check the box that describes your investment in this activity and see instructions for where to report your loss. b
For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11346H Schedule F (Form 1040) 2013
Rent or lease (see instructions): a Vehicles, machinery, equipment b Other (land, animals, etc.) . . Repairs and maintenance . . Seeds and plants . . . . . Storage and warehousing . . Supplies . . . . . . . Taxes . . . . . . . . Utilities . . . . . . . .
Car and truck expenses (see instructions). Also attach Form 4562 Chemicals . . . . . . Conservation expenses (see instructions) Custom hire (machine work) .
10 11 12 13
Crop insurance proceeds and federal crop disaster payments (see instructions) 6a
b Cost or other basis of livestock or other items reported on line 1a . . . . 1b c Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . . . . . . Sales of livestock, produce, grains, and other products you raised . . . . . . . . . . . . 3b Taxable amount 4b Taxable amount
Individuals, partners, S corporation shareholders, and all others. If line 7 is zero or a loss, enter the amount from line 7 on line 11 below and skip lines 8 and 9. If line 7 is a gain and you did not have any prior year section 1231
5a Commodity Credit Corporation (CCC) loans reported under election . . . . . . . . . . . . b CCC loans forfeited . . . . . . . . .
5c Taxable amount 6b Taxable amount
Custom hire (machine work) income . . . . . . . . . . . . . . . . . . . . . Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . .
Gross income. Add amounts in the right column (lines 1c, 2, 3b, 4b, 5a, 5c, 6b, 6d, 7, and 8). If you use the accrual method, enter the amount from Part III, line 50 (see instructions) . . . . . . . . . . ▶
Pension and profit-sharing plans 8 9
3 4 5 6 7
Yes Yes Yes
Part I Farm Income—Cash Method. Complete Parts I and II (Accrual method. Complete Parts II and III, and Part I, line 9.) 1a Sales of livestock and other resale items (see instructions) . . . . . .
1c 2
3b 4b 5a 5c
6b 6d 7 8
9
Part II Farm Expenses—Cash and Accrual Method. Do not include personal or living expenses (see instructions). 23 24
23 24a
12 13 14 15 16 17
11 (24b 25
26 27 28 29 30 31
)
No No No
improvements and expense of sale
Sales of Business Property
(Also Involuntary Conversions and Recapture Amounts Under Sections 179 and 280F(b)(2))
▶ Attach to your tax return. ▶ Information about Form 4797 and its separate instructions is at
www.irs.gov/form4797.
OMB No. 1545-0184 2012
Attachment Sequence No. 27
Identifying number OMB No. 1545-0074
Attachment Sequence No. 14
2013 Social security number (SSN) D Employer ID number (EIN), (see instr)
(g) Gain or (loss) Subtract (f) from the sum of (d) and (e)
Form 4797 (2012)
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