In this file:

 

·         AgWeb: American Families Plan Farm Example

… let's review the impact on income taxes of the farm operation being transferred to the next generation…

 

·         Farm tax specialist says Biden tax proposals would help young farmers

A farm tax specialist suggests President Biden’s tax proposals aren’t all doom and gloom for agriculture.

 

·         USDA Media Release: The American Families Plan Honors America’s Family Farms

·         NCBA on Biden’s proposed American Families Plan: “The devil is in the details”

·         NFU: Biden Outlines Priorities for Economic Recovery, Immigration Reform, and Climate Action During Congressional Address

·         WSJ: Biden’s Capital-Gains Tax Plan Would Upend Estate Planning by the Wealthy

 

 

American Families Plan Farm Example

 

By Paul Neiffer, AgWeb

April 29, 2021

 

The USDA issued a press release yesterday titled "The American Families Plan Honors America's Family Farms".  In the press release, they strived to indicate that the transfer tax proposed in the American Families Plan will not affect 98% of farm estates.  However, the details are lacking and most farm families that keep the farm in the family may not owe any transfer tax, but they will owe a lot more income tax under the proposal.

 

In their last example showing a married couple with $3 million of farm gains and $250,000 of non-farm housing gains would not owe any transfer tax as long as the children keep the family farm.  This likely does not mean the family simply owns the farm, the family must both own AND operate the farm.  If they end up selling the farm, the transfer tax will be owed and likely with interest from the year of death.

 

But let's review the impact on income taxes of the farm operation being transferred to the next generation.

 

Bill and Mary Farmer own a farm operation and file as a Schedule F.  They are located in Iowa and farm 4,000 acres of which they own 1,000 acres worth $10 million with no debt.  Bill and Mary are tragically killed in a car wreck on December 31.  The farm had the following assets at the time of death:

 

more, including video report [3:32 min.] 

https://www.agweb.com/opinion/american-families-plan-farm-example

 

 

Farm tax specialist says Biden tax proposals would help young farmers

 

By Mark Dorenkamp, Brownfield

April 29, 2021

 

A farm tax specialist suggests President Biden’s tax proposals aren’t all doom and gloom for agriculture.

 

Chad Hansen with farm accounting firm Corporate Farmer in Mason City, Iowa says there are a lot of potential benefits for young farmers in the President’s American Families Plan.

 

“The free preschool and maybe college, the child tax credit, and some of these other things that might be beneficial for (young) families.”

 

But he tells Brownfield middle-age and older farmers will probably get stuck paying for it...

 

more, including audio [18:32 min.]

https://brownfieldagnews.com/news/farm-tax-specialist-says-biden-tax-proposals-would-help-young-farmers/

 

 

The American Families Plan Honors America’s Family Farms

The American Families Plan encourages family farms to stay in the family and does not tax farm and asset transfer to family members upon death

 

Source: USDA

Apr 28, 2021

 

WASHINGTON, April 28, 2021 — The American Families Plan includes critical tax reform to ensure that the wealthy pay their fair share of taxes in order to finance essential investments in workers and families, including childcare, nutrition, higher education and more. One of those reforms is a change in the way capital gains are treated in our tax system so that, for people making over $1 million, the tax system no longer favors income from wealth over income from work. The plan won’t raise taxes on anyone making less than $400,000 a year.

 

Part of this plan to make sure the wealthy pay their fair share is a proposal to close the “stepped-up basis” loophole for wealthy estates so that enormous fortunes do not completely escape taxation. Under the proposal, unrealized capital gains (those that have never been previously taxed) are taxed at death above $2 million in gains per couple. But this won’t affect family farms that stay in the family.

 

·         Under this proposal, estimates indicate more than 98% of farm estates will not owe any tax at transfer, provided the farm stays in the family. The tax the remaining less than 2% would owe, would be on their non-farm assets.

 

The President recognizes the importance of agriculture and family farms to the American economy and way of life. He also recognizes the risks and economic challenges unique to agriculture, family farms and ranching operations across America. The Biden Administration is committed to American agriculture, family farms, ranches and the rural way of life. The American Families Plan protects family farms and ranches in two key ways:

 

·         No capital gains taxes at death for family farms. This plan includes a special protection for family-owned farms and businesses. It defers any tax liability on family farms as long as the farm remains family-owned and operated. No tax is due if the farm stays in the family. No one should have to sell a family farm they inherit to pay taxes and the President’s tax reform guarantees that.

·         $2 million exclusion from increased capital gains for all married couples. This plan also excludes the first $2 million of gains per couple ($2.5 million if the farm also includes the family home) from capital gains tax and heirs continue to get step up in basis on those first $2 million in gains. If an heir decides to sell the family farm, the first $2 million in gains is tax free.

 

How the President’s Capital Gains Reforms Affect Family Farms:

 

·         A married couple with $900,000 of farm gains and $200,000 of non-farm gains passes the farm onto their children. No capital gains taxes are owed, even if they sell the farm because the $1.1 million in gains are below the $2 million per-couple exemption.

·         A married couple with $3.0 million of farm gains and $250,000 of non-farm housing gains passes the farm onto their children. No taxes due as long as the children keep the family farm.

 

The President’s capital gains reforms are a key part of building a tax code that rewards work, and not wealth. The American Jobs Plan and the American Families Plan are once-in-a-generation investments in our nation’s future. The American Jobs Plan will create millions of good jobs, rebuild our country’s physical infrastructure and workforce, and spark innovation and manufacturing here at home. The American Families Plan invests $1.8 trillion in our children and our families—helping families cover the basic expenses that so many struggle with now, lowering health insurance premiums, cutting child poverty, and producing a larger, more productive, and healthier workforce in the years ahead. Together, these plans reinvest in the future of American families, American workers, and the American economy.

 

To learn more about the American Families Plan, visit the White House.

 

#

 

usda.gov

 

 

NCBA on Biden’s proposed American Families Plan: “The devil is in the details”

 

By Meghan Grebner, Brownfield

April 28, 2021

 

The National Cattlemen’s Beef Association says the suggested changes to existing tax code to pay for President Biden’s proposed American Families Plan could be detrimental to agriculture.  The American Families Plan would help families cover the basic expenses that many families struggle with today, from lowering health insurance premiums, and builds upon the American Rescue Plan’s reductions in child poverty.

 

Danielle Beck, senior director of government affairs for NCBA says there are proposed changes to two tax provisions that are critically important to America’s farmers and ranchers. “It would repeal the deferral of gains for real estate like-kind exchanges for any gains greater than $500,000 and eliminate stepped-up basis in gains excess of $1-million per person and $2.5 million per couple when combined with existing real estate exemptions,” she says.

 

But, she says the reform does include protections for family-owned businesses and farms, and they will not have to pay taxes when the business is given to heirs who continue to operate the business.

 

And while the President’s plan does not make any changes to the current estate tax exclusion limits, Beck says there are concerns with proposed changes, similar to the like-kind exchange...

 

more

https://brownfieldagnews.com/news/ncba-on-bidens-proposed-american-families-plan-the-devil-is-in-the-details/

 

 

Biden Outlines Priorities for Economic Recovery, Immigration Reform, and Climate Action During Congressional Address

 

Oklahoma Farm Report

29 Apr 2021

 

During his first joint address to Congress, President Joe Biden tonight highlighted the progress the United States has made on pandemic recovery and laid out his strategy to create additional jobs and lift more families out of poverty. The linchpin of that strategy is the American Families Plan, a comprehensive package that would invest $1.8 trillion in education, childcare, nutrition assistance, and paid leave.

 

A longtime advocate of strengthening the nutrition safety net, National Farmers Union (NFU) was heartened by the president’s attention to food insecurity, especially in light of the added challenges caused by the pandemic. “Though the issue of hunger has received a lot of attention over the past year, it certainly isn’t a new problem, and it won’t just disappear when the pandemic ends,” said NFU President Rob Larew. “Fortunately, we already have a safety net to catch families when money is tight – but it isn’t strong or wide enough to support everyone who needs help. President Biden’s bid to expand free school meals and summer EBT is an important step towards reinforcing our existing system so that it can accommodate all Americans experiencing food insecurity.”

 

To offset the cost of the plan, President Biden is proposing an array of tax reforms, including the elimination of stepped-up basis. In an overview, the White House promised that such a change would “be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.”

 

Larew indicated that he had reservations about the pay-for provisions and sought more information. “While we support many of the recommendations in the American Families Plan, we have questions about how these tax proposals will impact our farms and ranches,” he said. “The devil is in the details.”

 

President Biden also emphasized the necessity for immigration reform, asking Congress to offer undocumented immigrants a path to citizenship by passing his U.S. Citizenship Act of 2021. Under the bill, farm workers would be fast-tracked for naturalization and would be granted greater protections.

 

NFU expressed its approval of the bill...

 

more

http://www.oklahomafarmreport.com/wire/news/2021/04/01425_BidenNFU04292021_090328.php

 

 

Biden’s Capital-Gains Tax Plan Would Upend Estate Planning by the Wealthy

President’s proposal would tax gains on appreciated assets at death

 

By Richard Rubin and Rachel Louise Ensign, The Wall Street Journal (WSJ)

April 29, 2021

 

President Biden’s American Families Plan would raise capital-gains taxes and end a rule that has been a cornerstone of estate planning for generations of wealthy Americans.

 

The change—increasing the top capital-gains rate to 43.4% from 23.8% and taxing assets as if sold when someone dies—would upend the tax strategies of the very richest households. Mr. Biden’s plan would also claw back some benefits Congress gave to slightly less wealthy multimillionaires who have been spared from the estate tax but now could face capital-gains taxes at death.

 

Today, people who own assets that have boomed in value— Apple Inc. stock, the family beach house, a three-generation manufacturing company—don’t pay capital-gains taxes unless they sell. Under the Biden proposal, those unrealized gains would trigger taxes upon the owner’s death, minus a $1 million per-person exemption.

 

More than two-thirds of all U.S. families have some unrealized capital gains, according to the Federal Reserve, but most would be covered by the $1 million exemption. For families in the top 10%, with a median net worth of $2.6 million, median unrealized gains are $519,000.

 

The plan likely will change as it moves through Congress, and some Senate Democrats are already balking. Rep. Cindy Axne (D., Iowa) is concerned about the impact on family-owned farms and is working with other lawmakers from rural areas to seek an exemption for them. Republicans say tax increases would kill jobs and slow the economic recovery...

 

more, with subscription

https://www.wsj.com/articles/bidens-capital-gains-tax-plan-would-upend-estate-planning-by-the-wealthy-11619716044