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The Rural Voice, 1980-12, Page 14How to Save Valuable Time Next Spring ... . Plan Fall Plow -Down Now Plowing down your Phosphate and Pot- ash Fertilizer this fall can realty put you out in front next spring. There's usually more time in the fall, ana you'll know that the Phosphate and Potash are ready to go to work in the root zone next spring! Many farmers are including Fall Plow - Down in their management schedule. It simply makes good sense to them. It pro- bably makes good sense to you. For custom spreading and bulk delivery OEN Agromart® "Helping Things Grow" Call Brussels 887-6016 PG. 12 THE RURAL VOICE/DECEMBER 1980 How to reduce year-end tax bite BY BOB UPTIGROVE, C.A. There are probably some arrangements which can be made to reduce this year's tax bite, if some attention is given to the problem before the year - end. The first thing that should be done is to bring the farm records up to date. This universally hated job must be done sometime, and in order to make intelligent tax planning decisions it is obviously necessary to know your current tax position. If you need help don't hesitate to contact your accountant. Happily for tax planning purposes, farmers are permitted to calculate their income on a "cash basis." This means that income is reported in the year that it is received and expenses are deducted when they are paid. Consequently, many farm tax planning arrangements revolve around: 1. Postponing the receipt of revenue and 2. Accelerating the payment of expenses. Examples of the practical application of the above seem to be limited only to the ingenuity of each farmer. But some of the more common methods include postponing the sale of crops or livestock until early January and paying some of next year's costs such as fertilizer or feed in December. Certainly every effort should be made to ensure, if your banker is willing, that all bills received are paid by December 31. Naturally, this type of planning must be approached in a business -like manner. I must emphasize that it makes no sense to give u_p 51,000. to save or postpone 5360. in tax unless the 51,000. can be completely justified from a business point or view. Carefully consider interest costs, possible price differences and the cost of carrying livestock inventory over a period of time. Nevertheless, in many instances the technique of postponing receipts and accelerating ,payments is very useful and profitable. I noted above that "cash basis" meant that expenses were deductible in the year they were paid. However, this does not apply to the purchase of machinery, new buildings or other fixed assets. These are considered to be purchased when title to the asset is acquired which in turn is generally on delivery of the asset. As a result, capital cost allowance (depreciation) can be daimed on equipment bought in December but not necessarily paid for at that time. Many equipment dealers offer "spring financing" options with no payments or interest until spring. Many times a decision has been made to acquire a new implement and if it can be "purchased" in December rather than next spring there could be tax savings. The "investment tax credit" provisions should be considered in any decision to purchase equipment now or next year. This is the provision that allows a deduction from the actual tax dollars payable of 7% of the cost of new qualifying equipment and buildings. The "investment tax credit" incentive started in 1975 and any unused credits can be carried forward for five years. Undoubtedly some farmers will want to show some amount of tax payable for this year so that unused credits from 1975 can be used before they expire. This decision can be complex and you may want your professional advisor to assist you. There are many other things to consider before the year end such as the amount to pay children for their work, on the farm; Registered Home Ownership Savings Plan for children over 18 who do not yet own a home; arranging the 51,000. _investment income deduction for farmers and their spouses. Of course, if any property has been sold in the year, now is the time to consider the impact of capital gains and decide on an appropriate course of action.