A new report commissioned by the National Corn Growers Association’s (NCGA) Risk Management & Transportation Action Team (RMTAT) with KCOE-Isom dives into potential changes in capital gains federal taxation and step-up in basis for corn farmers.
“Having an understanding of the tax proposals, the potential impacts on farms, and what it would take for a change to be made legislatively is why RMTAT worked with KCOE Isom on this report,” said RMTAT Chair and South Dakota farmer Doug Noem. “We will continue to analyze and review the proposals from President Biden that if enacted would include a significant change from the historical treatment of income tax basis.”
The report is broken into seven sections, including the impact on agriculture with case study examples, an explanation of the administration’s proposal, and a history of step up in basis.
A key finding and explanation within the report states: “The recently-issued administrative revenue proposal outlines significant change from the historical treatment of income tax basis by transfer through an estate or lifetime gift. The proposal now includes these transfers as “realization events” and imposes capital gains tax on any appreciation of those assets that cumulatively exceed $1 million per taxpayer through lifetime gifts and transfers at death, indexed for inflation after 2022. Any unused lifetime exclusion is “portable” to a surviving spouse, consistent with the existing estate and gift tax portability rules.”
You can read the full report here.
Other NCGA Farm Policy Tax Action:
NCGA recently held an informational tax webinar for corn growers with KCOE Isom regarding News and Perspective on Tax Planning and Priorities.
Additionally, after a conversation that U.S. House Agriculture Committee Chairman David Scott (D-Ga.) had with the Corn Board in May, he sent a letter to President Biden expressing his concerns to proposed changes in tax policy that would eliminate the stepped-up basis provisions used by farmers.
In May, NCGA joined 40 agricultural organizations in a letter to congressional leaders outlining key tax priorities, including protecting current estate tax exemptions and preserving the step-up in basis for capital gains. You can read that letter here.
To keep up-to-date on the latest NCGA tax and farm policy work, click here.
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