Dan Bowman, Grand Prize, 2 Hours Succession Planning ($400 Value)

Barbara Maple, Pair of Stadium Chairs

Joyce Trout, KCPA t-shirt and cap

Chris Smith, KCPA t-shirt and cap

Cheryl Gerber, RTIC tumbler

Andy Wyss, RTIC tumbler

Now that you are 70 ½ years old, and you own a traditional IRA, the IRS requires you to take or withdraw a required minimum distribution (RMD) each year for the rest of your life. The amount is calculated each year based on the value of your IRA account and it will be included in your taxable income.

For individuals who regularly contribute money to charity and now must take the RMD from their IRA, there is a tax provision that allows you to maximize the tax ramifications for both. Instead of writing a check to your charity, you can direct the trustee of your IRA to transfer funds directly to the charity of your choice.  The amount transferred will count toward the minimum amount that you were required to withdraw for the year.  The maximum amount that can be excluded from income in one year is $100,000.

The tax benefit comes from the fact that you will not have to report the withdrawal as income. Although you do not get to claim the amount as a charitable contribution, you will benefit by reducing your adjusted gross income (AGI) which can help you in other areas, such as the taxation of your social security benefits, a reduction in the net investment tax, and a reduction in state and local taxes paid.  Also, with the passage of the new tax law which doubles the standard deduction in 2018 there will be fewer people who are able to itemize deductions and hence won’t see the tax benefit of their charitable contributions.  For people who make charitable contributions by using the QCD, they will still get the benefit of the donations by the fact that they are reducing their taxable income.

For individuals who are charitable and have an RMD requirement, this is a smart strategy that makes the most sense in reducing taxes and providing funds to your favorite charity.

For the past few days, I have been participating in a National Agriculture Conference developed by the AICPA (American Institute of Certified Public Accountants). Many nationally-recognized experts have been speaking.

Kline’s CPA Group prides itself in our understanding of the agricultural industry. It has been a pleasure to be part of this national event and to strengthen our knowledge base.

As I’m sure all of my farm clients are well aware, the farm economy is in a stage where prices are low, net incomes are slim or nonexistent, there are trade uncertainties, and financing is tough. Working capital is weak and equity is being burnt up with no real end in sight.

So how can Kline’s help your operation through these tough times?  We can. . .

• Assist in preparing fair market value balance sheets and accrual income statements for you and your lending institutions. We can also assist with cash flows.
  • In many situations, we find that clients do their best to fill out their yearend balance sheets for the bank but that they may be missing pertinent information that the banker needs for an insightful analysis.
  • We also notice that not all lenders understand that just looking at a tax return will not give them an accurate picture of what an operation’s true net income is.
• Review financials in order to calculate liquidity ratios, profitability ratios, leverage ratios, etc. These ratios are extremely important to lending institutions when they are trying to compare your numbers with their internal standards.
• Compare your ratios with other operations your same size and location to identify strengths and weaknesses.
• Give input on how to utilize your strengths to improve your weaknesses. Many times, this involves working with your bank to structure things so that all parties are benefited.

A few other things to note that were covered in detail during the conference. . .

• Marketing your crop in this environment is very important! Be sure to mitigate your risk. If you don’t have anyone that you are working with on this, we can suggest some resources.
• Review your need for crop insurance to mitigate risk. Again, if you don’t have anyone that you are working with on this, we can suggest some resources.
• Don’t forget about succession planning. Make time to begin the process!! If you’ve already begun, continue. If you’ve finalized a plan, review it for applicability.
• Details about the Tax Cuts and Jobs Act. Please join us on August 14th for a review of this Act at our Customer Appreciation Day!

The limitation for the $10,000 property tax and income tax is associated with personal income taxes and property taxes paid on personal residences and second homes on Schedule A (Itemized Deductions). The Tax Cuts and Jobs Act included a provision that disallowed prepaying your 2018 state income taxes.  The IRS has also just released additional guidance regarding prepayment of property taxes.  For the property taxes to be deductible in 2017 the property taxes must have been assessed, meaning a payment to the county auditor or treasurer’s office will not be deductible unless the taxes have been billed or assessed.

The Haupert Institute for Agricultural Studies opened in the fall of 2015 and promotes a Christian perspective on agriculture. The agribusiness program is intended to meet the growing need for agribusiness professionals and includes concentrations in animal production, communications and public policy, crop production, economics and finance, entrepreneurial small business management, management, marketing and ministry and missions. Huntington University also offers an agricultural education degree. To learn more, please visit www.huntington.edu/agriculture.

Founded in 1897 by the Church of the United Brethren in Christ, Huntington University is a comprehensive Christian college of the liberal arts offering graduate and undergraduate programs in more than 70 academic concentrations. U.S. News & World Report ranks Huntington among the best colleges in the Midwest, and Forbes.com has listed the university as one of America’s Best Colleges.