Paul Neiffer, a certified public accountant (CPA) from Clifton, Larson, Allen LLC and a speaker for the Farm Journal Legacy Project meetings this July, joins Farm Journal’s Pam Fretwell for the last time in a three part series on succession planning. With succession planning, Pam notes it’s important to make a plan ahead of time to help eliminate passing on something that requires paying a lot of taxes.
However, sometimes the kids don’t decide to come back and farm and the parents have to sell the farm and equipment. Some of the larger tax bills farmers will face are the self-employment tax and the income tax and, by the time these get factored into the sale, they could be looking at a 50% tax bracket, Neiffer notes.
“A vehicle we use a lot of the time in this situation is the charitable remainder trust,” Neiffer says.
Through the charitable remainder trust, owners can sell their grain and equipment and effectively not pay any income tax on it at all while lowering the amount they would have to pay in taxes.
Paul Neiffer explains: