RANCHING Business
to be. While it may be lower, it may also be higher, which then creates a cumulative effect and may result in the producer being in a higher tax bracket, he says. Second, producers who attempt to lower their tax
payment in one year may fi nd themselves locked into a long-term course of action, Childs says. For instance, producers with high incomes after
2014 may have offset their tax bill by pre-purchasing supplies for 2015. The result? The producer has fewer expenses to offset their 2015 income; therefore, they are forced to pre-purchase the supplies for 2016 or pay a large tax bill. Swigert says, “If an investment to reduce taxes
does not increase the operation’s effi ciency or improve quality of life as well, it may not be a good investment in the long-term. While nobody enjoys paying taxes, there is nothing wrong with it. It signals that you had a good year.” According to Childs, the most effective way to reduce
a tax bill over time is to manage income levels so that high peaks and low valleys are avoided. “Generally, people will accrue less tax over time
by keeping their taxable income levels as consistent as possible,” Childs says.
ANGUS MEANS BUSINESS.
A reliable business partner is difficult to come by. At the American Angus Association®
, a team of
skilled Regional Managers can guide your operation toward success.
Contact Radale Tiner to locate Angus genetics, select marketing options tailored to your needs, and to access Association programs and services. Put the business breed to work for you.
Radale Tiner, Regional Manager
3707 Marielene College Station, TX 77845 979.492.2663
rtiner@angus.org
New Mexico Texas Louisiana
3201 Frederick Ave. • St. Joseph, MO 64506
To subscribe to the Angus Journal, call 816.383.5200. Watch The Angus Report on RFD-TV Monday mornings at 7:30 CST.
816.383.5100 •
www.ANGUS.org © 2015-2016 American Angus Association
Depreciation management Physical deterioration and technological obsolescence
is a non-cash cost that if not addressed, can wreak silent havoc as the years pass. “Some operators do not address the cost of depre-
ciation until they are almost out of business,” Childs says. “Effi cient operators will routinely upgrade assets to stay competitive.” He shared the example of 2 operators he had worked
with in the past. One was a row crop farmer who got started on his farm with used equipment. The man was a gifted mechanic and managed to keep the equip- ment pieced together and running for 25 years, but was never able to replace it. After a quarter century of work, he found himself with non-functional equip- ment, no equity, or money to replace it, and no way to get in his next crop. The other operator was a rancher who used a tractor
for a variety of purposes including feeding. The trac- tor was a good piece of equipment, but it did not start dependably in cold weather. If the rancher forgot to plug the tractor in and the weather dipped below 40° F, his feeding schedule was disrupted because the trac- tor would not start. Although it was just a disruptive
72 The Cattleman November 2015
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