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Why Every Farmer Needs to Understand a Conservation Easement by the End of 2013

Caleb Huftalin Updated: 07/09/2013 @ 1:18pm Caleb Huftalin, CFP® serves farmers and ranchers by specializing in tax planning, tax mitigation, and alternative investments. He provides objective comprehensive financial advice at Catalyst Wealth Management. Growing up on a farm in northern Illinois enabled an understanding of the complexity and unique situations farmers face when making financial decisions. Caleb graduated from Northern Illinois University with a degree in Business Administration and minor in Finance. He and his wife of eight years, Stacey, live with their sons, Levi and Micah, in Cumming, GA.

Farmers have a problem with taxes.

Seasonality and profit volatility from year to year mean that planning for taxes can be an excruciating process. The income roller coaster and tax bracket  hopping encourages potentially unnecessary, and more importantly, often ill-timed investment in equipment and other capital expenses just to save tax dollars in the “good years.” 

Depreciation and deferred crop value don’t fully solve the problem. Eventually the day of reckoning strikes when crops are sold and depreciation is recaptured. What if you could participate in significant deductions that are true immediate deductions with no postponement?

There is a solution. Farmers now have access to one of the most unique federal tax saving opportunities they've never heard about. We all know the IRS gives taxpayers deductions for doing certain things if you itemize. Give to charity? Deduction. Pay mortgage interest? Deduction. Contribute to a qualified retirement plan? Deduction (at least on the front end). 

Did you know that if you own a piece of property and place a conservation easement on the property, you also have the potential to claim federal tax deductions? Here’s the key for farmers: now it’s not even necessary to look at your current property portfolio and decide what to conserve. In fact, even this year there is a way to conserve land and participate in deductions on property you don’t own yet. 

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