Last week, Legacy Nutrient Tax Deductions (LNTD) were discussed and this is a follow up. This is a 1960’s tax deduction for oil, gas, mining, agriculture, and even timber production. It allows farmers to deduct the “excess value” of soil nutrients as a depreciating asset. For 60 years this deduction was ignored but now the IRS has finally come up with tax rules for this deduction. This article will explore how some farmers using this deduction. Consult with your attorney and CPA whether you want to pursue this deduction. Here are some common problems farmers have had with this tax deduction. First, many were taking deductions too quickly or excessively. Improper sampling (mixed depths, inconsistent grids) are an issue. It is easy to double count current owner tenant inputs. Bad baselines will inflate “excess” nutrient values. Thin documentation, i.e. can’t satisfy PLR MSSP guidance for tax purposes. The biggest problem most farmers who are looking into this deduction was how to documen...

Everyone is required to pay taxes but no more than the law requires. Farmers have many assets which may depreciated to lower taxes. Congress has given a few businesses including oil, mining, and even agriculture ways to depreciate assets that are consumed. For example, back in the 1960’s; Congress allowed oil and mining companies to depreciate the value of their investment in oil and minerals. Included in that legislation was the same deductions for agriculture and timber. For 60+ years, those federal tax deductions have been ignored but now tax rules have been written to allow farmers to deduction the nutrient or fertilizer value of their cropland and even timber, as a tax deduction. Barry Ward, OSU Farm Management Economist discussed this recently at a farm meeting. While CPA’s and lawyers have a right to be skeptical, they can sort it out by reading the tax laws (more on that coming). The federal tax deduction write off discovery occurred about 5 years ago. A Brazilian farmer/busine...

  Corn crop prices are low and fertilizer prices are high. Farmers are looking for ways to lower their nitrogen (N) fertilizer bill. University N recommendations have changed over the years. University N research in the 1950’s advocated heavy N fertilizer because yield increased as N application increased?? Extra N fertilizer was a cheap fertilizer insurance policy. About 10–15 years ago, universities re-examined that original data and found little direct relationship between higher corn yields and higher N rates. The relationship was quite variable! Five major factors like temperature, moisture (weather), soil pH, soil oxygen levels, and soil organic matter (SOM) affects plant N uptake. The N relationship to yield is so variable that universities went to a N application rate based on the price of N relative to crop prices. As N prices increase and crop prices decrease, economically it’s better to cut back while if N is cheap and corn prices high, the N rate is increased to increas...

Getting a new herbicide approved may take 12–15 years and cost over $300 million dollars. That’s just for the successful herbicides. The last new herbicide modes of action occurred about 40 years ago, but now several companies are finally releasing new herbicides effective against weed resistant weeds. Developing safe new herbicides is a multi facet project. First, large numbers of chemicals have to be manually screened. Now with AI, this process is much faster. Today most new herbicides are designed to be more site specific for either a targeted site or a weed group. After screening, it has to be tested multiple times to make sure it is biologically active but also does not harm the crop. Then environmental testing and toxicology tests are performed followed by field testing and formulations. A new herbicide has to cross several hurdles to get approved. Bayer invests about 1 billion dollars per year in agricultural research looking for new herbicides and or modes of action. The first ...