April 2, 2014
Nathan Shields, CPA, Jr Manager has been with the firm 6 years and spends a lot of time helping dairy clients understand accounting, taxes and the farm bill.
The 2014 farm bill was signed by President Obama on February 7, 2014. It is an expansive bill that is also known as the “jobs bill,” “innovation bill,” “research bill,” or “conservation bill.”
The two focuses of the bill are to help rural communities and provide food assistance to poor families and children. I am going to focus specifically on the impact the farm bill will have on dairies.
There is a new “Made in Rural America” initiative that will help rural businesses market their products globally. Along with the “Made in Rural America” branding, there will also be five regional forums on rural exports and an “investing in rural America” conference. It is expected that the USDA staff members in each state will be trained to help promote rural exports.
The Dairy Product Support Program (DPPSP) from the 2008 farm bill has been repealed but the permanent DPPSP from the 1949 Agricultural Act is still in effect. The Milk Income Loss Contract (MILC) has been replaced with the new Margin Protection Program for Dairy Producers. The Dairy Export Incentive Program (DEIP) is gone, effective immediately.
The farm bill moves more of the risk, and decisions to the farmer. The dairy section is no different. There are two new programs that will affect dairies. They are:
1. The Margin Protection Program for Dairy Producers (MPP). It is a voluntary program that depending on the level of protection purchased, pays out if a national benchmark for milk income over feed costs falls below the insured level.
2. The Dairy Product Donation Program (DPDP). This program requires the Secretary of Agriculture to immediately procure and distribute certain dairy products when the actual dairy production margin (ADPM) falls below the lowest margin level specified in the MPP.
The national benchmark for the MPP uses a hypothetical, but a nationally representative dairy herd. The calculation is calculated by using the national average price for all grades of milk less a factor of the cost of corn, soybean meal and alfalfa hay. The calculation is as follows:
National average of all classes of milk less 1.0278 x price of corn + 0.00735 x price of soybean meal + 0.0137 x the price of alfalfa hay. This is a calculation that is performed at a national level. It will not be calculated at a regional level. It is assumed that if the national average is “bad,” then each farm will be “bad” and qualify for the payment. They do not guarantee a specific dairy’s margin, but expect that each dairy will follow the national trend.
The cost for a $4.00 cwt income of feed cost (IOFC) is free. You may elect up to $8.00 cwt of coverage in $0.50 increments. The first 4 million pounds have a lower premium than the rest of the milk that you insure. There is also an additional 25% discount on the first 4 million pounds for producers who sign up in 2014 and 2015.
March 24, 2014
Most business adages say that a vision that goes beyond 20/20 and a passion that is forever burning are enough to propel you to success. You’re in danger if you take this too seriously. You need money. While bootstrapping is a popular option among many businesspeople, it doesn’t apply to those whose products, services, and business models require large funding.
Every startup seeking financial backing faces the similar problem: pitching to a venture capitalist. Depending on the industry you’re in, a venture capitalist uses a unique set of criteria that will gauge if the entirety of your plan is worthy of funding. Here are some of the things you need to consider heavily before giving that big pitch. (more…)
March 18, 2014
Authored By: Lynette Wildman, Administrative Assistant in the Logan office
We wanted to share some additional tips that are not tax related but can be very helpful!!
There are many things to think about when planning a wedding. I’d like to share a few tips that may be helpful. Keep in mind that everyone’s circumstances are different. Ours was mixing American traditions with Tongan traditions.
Set the budget: I would suggest setting this first. Set it before you start so it doesn’t get out of control. Have the bride and groom choose the things that are most important to them so you know where to spend a little more money. (more…)
March 6, 2014
Authored By: Sheri Lewis, Staff Accountant, who has worked at Cook Martin Poulson since November 2011. She recently received her Master of Accounting Degree and is in the process of taking the CPA exams.
Although the IRS will audit less than an estimated of 1% of all the individual tax returns each year, the chance of being audited is a common fear of many clients. While no one can predict with certainty who will be audited, there are some common “red flags” that could increase your chance of audit. The IRS won’t come right out and provide a list of items they consider for audit, but there have been recent articles by tax professionals that outline some key areas that past data has shown to have been more heavily scrutinized by the IRS.
Some of the common “red flags” are as follows: (more…)
February 26, 2014
Simply put, estate planning is one way to leave instructions with regard to caring for all your assets in case you become incapacitated due to an illness, or if you unfortunately meet your demise. This includes a lot of legal instruments.
The legal nature and complexity of estate planning led majority of Americans to believe that estate planning is only for those who can afford it: the rich and the A-Listers. Below are other misconceptions you need to ward off before they prevent you from making one of biggest and most important decisions of your life. (more…)Older Entries »