Clements: The tax reform framework released this week could provide tax relief to agriculture; however, further refinement is needed to ensure farmers and ranchers will see the benefits of reform. American Farm Bureau Federation tax specialist Pat Wolff says the framework includes lower rates for farmers and ranchers.
Wolff: There would be lower rates for incorporated businesses, for non-incorporated business and for individuals. Of course, that comes at a price, and the price is the loss of credits and other deductions. We don’t know what those losses are going to be yet, and that’s what’s important to pay attention to.
Clements: The framework does not include language on cash accounting, like-kind exchanges, and whether or not all farms will be able to take advantage of a deduction for business interests. The framework does include, though, elimination of the estate tax.
Wolff: That’s something that Farm Bureau and farmers and ranchers have been trying to achieve for a long time. The framework, however, does not say what will happen to stepped-up basis, and care has to be taken that Congress doesn’t trade the estate tax for a new capital gains tax that would be created if stepped-up basis is lost.
Clements: The tax reform framework was a joint announcement by the White House and Congress, which Wolff says means the big decisions have been made, paving a path for passage.
Wolff: The goal is to pass tax reform before the end of the year, but before they can actually write and pass a tax bill, they have to pass next year’s budget. That’s expected to start next week, so we could see the tax bill move the middle of October.
Clements: Micheal Clements, Washington.