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jknmcd
07-17-2010, 11:23 PM
Myself, Brother and sister have received from our Mother her 50% of her family farm. Her brother, our Uncle owns the other 50%. The farm is leased to a farmer and does not make a profit each year, whether it is meant to do that or just plain ignorance that is how it has been. My questions are what benefits can we receive from this farm tax wise and what can we do to help shelter us from paying our share of taxes at the end of the year? Do we need to think of an LLC or a C corp.. We are planning on being more active then our Mom was and make the most out of this asset. Thanks for any help you may have.

jknmcd
07-19-2010, 07:01 PM
OK thanks for all your help, over 25 views and not 1 person has any help for me. I'll move on.

ArcSine
07-20-2010, 08:17 AM
Your local phone book will furnish you with names of top-shelf tax advisors. For $175 an hour you purchase the right to have them answer your questions on a schedule and timeframe that suits YOU.

When a tax expert volunteers his or her time to give you free advice via a forum, they will do so as their schedule permits. YOUR schedule takes a back seat, amigo.

Spider
07-20-2010, 08:58 AM
Be thankful those 25 people didn't answer. If they had felt obliged to answer when they had no advice to give, you can be sure there would have been a bunch of bad advice in there!

Besides, this is a discussion forum where we discuss things, not a free advice Q&A service. Why not come back and join in the discussion.

Evan
07-20-2010, 09:53 AM
Myself, Brother and sister have received from our Mother her 50% of her family farm. Her brother, our Uncle owns the other 50%. The farm is leased to a farmer and does not make a profit each year, whether it is meant to do that or just plain ignorance that is how it has been. My questions are what benefits can we receive from this farm tax wise and what can we do to help shelter us from paying our share of taxes at the end of the year? Do we need to think of an LLC or a C corp.. We are planning on being more active then our Mom was and make the most out of this asset. Thanks for any help you may have.

You may wish to consult with an accountant who specializes in farms, as they can probably best help you figure out the best structure based on your tax needs. As there appears to be an agreement in place that your mother's children equally own 50%, or 16.66% each -- and her brother 50%, you are essentially operating as a partnership. This means partnership profits and losses are allocated amongst each of you based on this percentage.

An LLC could be advantageous if your seeking limited liability. As you have four people involved, doing so would generally limit your liability to your investment (whether gifted, inherited, etc.) -- which means you could lose every penny (always a risk), but aren't obligated to put more than that amount into the company (which you would be had you operated as a general partnership). But if you do go this route, you will want a detailed operating agreement spelling out these details, and an attorney would be best crafting this.

I'd avoid a C-Corporation at all costs. Losses are not deductible, and if the business is not profitable, you're better off being able to deduct your share of loss on your individual return. If there are profits, an accountant should look at each of your tax situations to determine whether a certain entity would be better than another.

The question then remains why isn't this farm profitable... I would start looking into that before you proceed further.