Barry Ward, OSU Extension, Leader, Production Business Management, Department of Agricultural, Environmental, and Development Economics & Greg Reinhart, Undergraduate Student Intern, OSU Department of Agricultural, Environmental and Development Economics
Budgeting helps guide you through your decision making process as you attempt to commit resources to the most profitable enterprises on the farm. Crops or Livestock? Corn, Soybeans, Wheat, Hay? We can begin to answer these questions with well thought out budgets that include all revenue and costs. Without some form of budgeting and some method to track your enterprises’ progress you’ll have difficulty determining your most profitable enterprise(s) and if you’ve met your goals for the farm.
Budgeting is often described as “penciling it out” before committing resources to a plan. Ohio State University Extension has had a long history of developing “Enterprise Budgets” that can be used as a starting point for producers in their budgeting process.
Newly updated Enterprise Budgets for 2013 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:
Enterprise Budget projections updated for 2013 include: Corn-Conservation Tillage; Soybeans-No-Till (Roundup Ready); Wheat-Conservat... Read More »
By: Amanda Douridas, Extension Educator
On May 10, 2013 farms must have prepared and implemented their Spill Prevention, Control and Countermeasure (SPCC) Plans if they fall under regulation by the EPA. Farms with 1,320 gallons above ground storage or 42,000 gallons below ground storage of oil or oil products meet the requirements to have a SPCC. This includes all containers 55 gallons or greater. The implementation date was delayed from its original date in the fall of 2011.
Two basic requirements need to be met to comply. The first is having sufficient secondary containment for storage and transfer areas to contain any spillage. The containment area is designed to prevent discharge until cleanup can occur and is usually designed to hold 110 percent of the largest container or tank in the area. The second requirement is to prepare and implement a written SPCC plan that covers all of the steps the farm has taken to prevent discharges into the environment. The plan must be updated every 5 years or in the event of a major re-design of the area. Any employees handling oil and petroleum products must be trained on what the plan involves.
Some farms may need to have their plan approved by a Professional Engineer. If on farm storage is between 1,320 and 10,000 gallons, you are allowed to prepare and self-certify if you have not had any spills of 1,000 gallons or more at once or less than two discharges of more than 42 gallons in the last year. Also, if secondary containmen... Read More »
By: Chris Zoller, Extension Educator, ANR, and Peggy Hall, Director, Agricultural & Resource Law, Ohio State University Extension
With the drilling of gas wells comes the need to establish pipelines to move the gas from the point of drilling to the end users. Landowners across Ohio are being asked to sign agreements allowing companies to purchase acreage for pipeline construction. A new fact sheet provides landowners with an overview of items to consider regarding standards and construction specifications related to pipelines. This fact sheet is intended for educational purposes only. We strongly encourage landowners who may be considering negotiating a pipeline easement to consult with an attorney familiar with such negotiations. Download the factsheet by clicking A Landowners Guide to Understanding Recommended Standards and Construction of Pipeline Standards 2012 2012.
By: Chris Zoller, Extension Educator, ANR; Peggy Hall, Director, Agriculture & Resource Law Program; and Mark Landefeld, Extension Educator, ANR
Ownership of a piece of property may best be described as a “bundle of rights.” These rights include the right to occupy, use, lease, sell, and develop the land. An easement involves the exchange of one or more of these rights from the landowner to someone who does not own the land. Easements have been used for years to provide governments, utilities, and extractive industries with certain property rights. An easement permits the holder certain rights regarding the land for specified purposes while the ownership of the land remains with the private property owner. The property owner retains ownership of the land and is responsible for any and all taxes due. The easement agreement should be filed with the county recorder where the property exists. To read more download the pdf of the new factsheet titled Considerations When Evaluating a Pipeline Easement Agreement.
OSU Extension is pleased to announce a series of farm management webinars to be held in the upcoming two months. These webinars are designed to deliver current educational information for farmers, landowners, and other interested participants. There is no pre-registration required for these webinars. Just log on from the comfort of your home or business! Attend all or any of the meetings by logging on to: http://carmenconnect.osu.edu/ohioagmanager. The following is a description of the upcoming webinars.
Financial & Tax Implications of Oil & Gas Leases - Wednesday, March 13, 2013, 7:00 p.m. – 9:00 p.m.
David Marrison, Associate Professor & OSU Extension Educator, will be the featured speaker for this webinar. Don’t get caught blindsided by the taxes which will be due from signing an oil & gas lease. Learn how the IRS handles oil & gas payments. Learn which payments are subject to ordinary income taxes versus capital gain; about the percentage depletion deduction; and how signing a lease may affect your CAUV status. Learn what questions to ask and receive financial planning tips for managing the potential income from these wells.
Navigating the ACRE/DCP Decision in 2013 – Monday, March 18, 2013, 7:00 p.m. – 8:30 p.m.
Chris Bruynis, Assistant Professor & Extension Educator will be the featured speaker. With the passage of the 2012 American Taxpayer Relief Act, Congress extended many provisions of the 2008 Farm Bill. Farmers now ca... Read More »
by Larry Gearhardt, OSU Income School Director
Some landowners in the oil and gas drilling area of Ohio may receive two real property tax bills for the same property. How can this happen? When the mineral interests are separated from the surface, the Ohio Revised Code (section 5713.04) requires the county auditor to list and value the land in separate entries, specifying the interest listed, and tax the parties owning the different interests. If the same person owns both the surface and the separated mineral interests, he may receive two property tax bills. This has surprised some landowners after the separation of the mineral interests.
WHY WOULD A LANDOWNER SEPARATE MINERAL INTERESTS BUT RETAIN OWNERSHIP?
Some landowners are taking the proactive step of separating the mineral interests from the surface for succession planning and tax management. It is not uncommon for a trust to be used. When we say that the landowner retains ownership of both the surface and mineral interests, we are also including the scenario where the mineral interests are separated and placed in a trust for the benefit of the surface owner. Each landowner has his own reason for doing this, but one reason is that it may provide flexibility when doing succession planning.
ONE LANDOWNER RECEIVING TWO PROPERTY TAX BILLS HAPPENS IN ONLY RARE CIRCUMSTANCES
The focus of this paper is on the very narrow circumstance where a landowner separates the mineral interests from the surface, by deed, and ret... Read More »
Small farm owners who want to learn more about how to make their farms work better for them or expand their operations, or those new to agriculture who are looking for ways to utilize acreage, can attend workshops and presentations on these and more issues during a small farm conference March 23 in Zanesville, Ohio.
The "Living Your Small Farm Dream" conference and trade show is designed to help participants learn more tips, techniques and methods for diversifying their opportunities into successful new enterprises and new markets as a way to improve economic growth and development on their farms, said Mark Mechling, an Ohio State University Extension educator in agriculture and natural resources.
"It may be a person who is new to agriculture, or someone that may have acreage that they aren't using to the fullest, or even someone who has newly acquired land and may not know what to do with it," he said. "What we try to do with this conference is to give participants a smorgasbord of ideas that may interest them by offering a wide variety of sessions in which they can learn more in-depth about an issue, gain resources and learn how to finance a new venture."
The conference, which will be held at the Muskingum County Convention and Welcome Center, 205 N. Fifth St. in Zanesville, kicks off with a keynote address on "Planning and Goal Setting," presented by Mike Hogan, an OSU Extension educator.
OSU Extension is the outreach arm of Ohio State University's College ... Read More »
Small farm owners who want to learn more about how to make their farms work better for them by increasing profits, increasing marketing efforts, expanding operations, or adding new educational or agritainment amenities can attend workshops and presentations on these and more issues during a small farm conference on March 8-9 in Wilmington, Ohio.
The "Opening Doors to Success" conference and trade show is designed to help producers learn more tips, techniques and methods and to increase their awareness to make their small farm operations more successful, which can lead to increased farm profits, said Tony Nye, an Ohio State University Extension educator.
"This intensive conference will provide participants the opportunity to choose from a diverse variety of seminars that can help their farming operations be successful," he said. "The conference is a great opportunity to network and learn from other producers, Extension experts and representatives from the U.S. Department of Agriculture."
The conference kicks off with a panel discussion of Ohio producers who will talk about "Opportunities and Challenges to Running a Successful Small Farm Operation." The group will address issues surrounding labor, financing, deciding on a farm specialty, dealing with customers, and whether or not to add agritainment or education components to a farm.
The conference, which will be held at Wilmington College, Boyd Cultural Arts Center, 1870 Quaker Way in Wilmington, will feature 2... Read More »
By Larry R. Gearhardt, Director of OSU Tax School
The depreciation deduction (usually MACRS method) for assets used in a trade or business has always been very important to farmers when preparing their income tax returns. In addition to MACRS, the “fiscal cliff” legislation, passed early in 2013, allows two additional cost recovery deductions in the year a depreciable asset is placed in service. Click here to view the IRS news release on the fiscal cliff changes to depreciation.
First, Code Section 179 allows the entire cost of qualifying assets to be deducted in the year they are placed in service, subject to some dollar and income limitations. Second, Code section 168(k) allows 50% of the cost of qualifying property to be deducted as additional first year depreciation (AFYD) for property placed in service in 2012 and 2013. Since MACRS depreciation, Section 179, and AFYD can all be applied to the same asset, whichever method you choose, or a combination of all three, deserves attention as a planning tool to minimize taxes both now and in the future.
Section 179 Property
Many taxpayers are eligible to deduct (in lieu of depreciation) the cost of most tangible personal property used in the active conduct of a trade or business. The taxpayer can elect on Form 4562 to expense the cost of eligible “Section 179 property.” Under the old law, this deduction was limited to $139,000.00 for 2012 and $25,000.00 for 2013. The new legislation increased the amount that ca... Read More »
By Larry Gearhardt, Director of OSU Tax Schools and David Marrison, Extension Educator, ANR, Ashtabula and Trumbull Counties
Some landowners have already discovered that lease bonus and royalty dollars received for shale oil and gas lease payments over $150,000.00 per year are subject to the Ohio Commercial Activity Tax (CAT). See OSU Extension Fact Sheet at http://ohioline.osu.edu/sh-fact/pdf/SOGD_TAX2_12.pdf written by David Marrison, Extension Educator. However, some farmers may be surprised to find that they too are subject to the CAT tax because of higher gross receipts.
The Ohio CAT tax was passed in 2005 in response to a lagging economy. In exchange for the CAT tax, businesses are no longer required to pay personal property tax and individuals pay a lower Ohio income tax rate. Ohio’s income tax rate is currently approximately 20% lower than it was in 2004.
The CAT tax is an annual tax that is imposed on most businesses in Ohio and is measured by the amount of taxable gross receipts from most business activities. A business with taxable gross receipts of more than $150,000.00 per calendar year is subject to this tax, which requires the person to register as a taxpayer with the Ohio Department of Taxation. The term “gross receipts” is broadly defined to include most business types of receipts from the sale of property or the performance of services. Certain receipts are not taxable receipts and are excluded from the taxpayer’s tax base, such as dividends... Read More »
by: David Marrison, OSU Extension Educator
New and beginning farmers, returning veterans and disadvantaged producers may qualify for a new micro-loan program being offered by the USDA Farm Service Agency.
This program will offer applicants a micro-loan designed to help farmers with credit needs of $35,000 or less. Farms seeking a smaller loan for start-up or operational now have a new source of revenue. The loan features a streamlined application process built to fit the needs of new and smaller producers.
The new micro-loan program is aimed at bolstering the progress of producers through their start-up years by providing needed resources and helping to increase equity so that farmers may eventually graduate to more traditional commercial loans. Producers can apply for a maximum of $35,000. Microloans can be used for all approved operating expenses as authorized by the FSA Operating Loan Program, including but not limited to: Initial start-up expenses; Annual expenses such as seed, fertilizer, utilities, land rents; Marketing and distribution expenses; Family living expenses; Purchase of livestock, equipment, and other materials essential to farm operations; Minor farm improvements such as wells and coolers; Hoop houses to extend the growing season; Essential tools; Irrigation; and Delivery vehicles. As their financing needs increase, applicants can apply for a regular operating loan up to the maximum amount of $300,000 or obtain financing from a commercial lender un... Read More »
Information presented above and where trade names are used, they are supplied with the understanding that no discrimination is intended and no endorsement by Ohio State University Extension is implied.
Ohio State University Extension embraces human diversity and is committed to ensuring that all research and related educational programs are available to clientele on a nondiscriminatory basis without regard to race, color, religion, sex, age, national origin, sexual orientation, gender identity or expression, disability, or veteran status. This statement is in accordance with United States Civil Rights Laws and the USDA.
Keith L. Smith, Ph.D., Associate Vice President for Agricultural Administration and Director, Ohio State University Extension TDD No. 800-589-8292 ( Ohio only) or 614-292-1868