Home Forums Hunting & Shooting Hunter's Campfire Kiss your family farms and businesses goodbye

This is absolutely true, but it clearly shows how horrible farming is as a use of capital. Were someone to sell and invest that $5.4 million at the average rate for the last 100 years (which is over 11%), it would create an income of more than $500,000 per year. Few, if any, farms realize that net, or come even close to half that, meaning the farmers, in effect, are paying $300,000 or more per year for the privilege to farm.

I know, I know, that's an over simplification, ignoring value gains of the farms among others, but it's still too close to the truth to be comfortable.

I won't go into the details because they're very complex. Here's a summary.

At present a married couple can exclude $23.5MM from gift and inheritance taxes due to very favorable laws passed by Republican congresses in recent years, before Trump. BUT the most favorable law expires in 2026.

Biden has proposed (openly, for about a year) drastically reducing this.

So you don't have $23.5MM?

Biden has also proposed changing the law, in part as the OP noted, to greatly increase the taxes on the lower amount remaining of the exclusion.

The result is the .gov will get a lot more of your money and your kids won't get it. We're talking about them taking stuff you already own, not stuff you earn. And they want to take the new inheritance taxes each year, even before you die.

This is in addition to any income tax increase, which the Dems have also proposed. Where do you think they can get the money for the $1.9 trillion "Covid bill?" They're borrowing it and will need to pay back the "loan."

So what can you do about it?

If you have any appreciable amount of assets, go see your lawyer. Ask him about trusts in general and a SLAT in particular. Don't wait. Estate lawyers were very busy in the last half of 2020 setting up trusts to shield assets in case the Bolsheviks won.

Just do it.

Redistribution of wealth. There will be special concessions on taxes and financing for the women and minorities farming start-ups. The women and minorities will be allowed/required to lease land from Massa' Gates and his ilk, "cuz he gwine treat y'all jist fine'!

At least that was the plan in South Africa after Apartheid...and look how well that has turned out.

True, but plenty of people own stocks and that was the point. And besides IRAs plenty of people are in mutual funds and regular stocks and more so every single day. Why? Because the stock market is the only place one can get a return.

family trust business going to go thru the roof

Not really. Why? Because it IS a return and it is less risky than the market. Can’t stick money in the bank and get a return in the last thirty years. The market is always risky.

The problem with this is that the cost of land is going up faster than that and they ain't making any more land. Already have to be filthy rich to buy land in a lot of areas now. Soon only the super rich will be able to buy land.

I just read up a little on it and have a few questions because I am not very familiar with how US tax calculation works in practice.
So I the Internet told me that this tax is due when the investment is sold, how would this affect someone who now owns a farming business and would not want to sell it? Would he need to pay anything?
Also read that incomes under $1 Million will still pay the same capital gains tax as before. But, when talking about farms, is this income the profit or just the proceeds without production costs?

No, I know. Super rich can buy land to play on or as a source of income. And like I said in an earlier post, it IS a return. There just aren’t many places anyone can get a nice steady and relatively safe return. A rich guy or a corporation that has $50 million sitting around not doing anything can take than money and put it to work. The return is not huge, but there is one and it’s safer than lots of other things. That of course, drives up the prices and prices the little man out of the market.

Apartment buildings are hot hot hot right now for the same reason.

It's going to be less than $5.4 million after taxes. But, what you're saying is what is happening in some places, especially where towns are expanding out to swallow up farms for housing. Even then, a lot of farmers run the money through 1031 exchanges and buy more farm land farther out in order to avoid the tax bite.

If you buy a stock, do you expect the dividends to pay for it? No. Part of the calculation is the expected appreciation of the stock price. Same with land, be it farm, timberland, or your house and lot. Also, land is somewhat like gold, a store of value. In JoeBob's example, the land went from $900 to $9,000 in 40 years. That's about a 6% return without taking into account the annual income from the farm.

Annual income from the farm is quite an assumption. There’s also the distinct possibility of annual losses,

Its a gamble, in Ga, if you go into a nursing home, like a lot of older folks do, state can go back as far as 10 years after your property. In Ga, pretty much everyone gets it to their kids as soon as they can to prepare for this in case it happens.

Trusts ?

Boy that is a fact! With unstable fuel prices and a broken crystal ball how are you going to make a budget. My Uncle who eventually became wealthy farming dryland wheat felt breaking even was a hell of a task.

It's been a while since I looked at Biden's tax plan but one of his points was drastically raising the capital gains up to the 40 % neighborhood, he also had a provision in there that I took to really limit business deductions for sole proprietorships/S corps where only a fraction of the actual business expenses would be deductibe (something like 25% of the real expense) that's going to hurt a lot of farmers and other small businesses.

The farm entity might not show a profit, but the farmer draws a salary and that salary is part of the farm's operating expense. As a purchaser of farm land, around here you can get anywhere from $80 to $100 per acre, sometimes more, per acre per year in cash rent, payable at the beginning of the year. So $90 an acre cash rent on $3,000 per acre land is a 3% return annually.

A member here posted this on the Hunter’s Campfire forum over 8 years ago...

Anything that happens to you can end in only two ways: It will kill you, in which case all your problems are over. Or, it will not kill you, in which case it wasn't really a problem. The lesson is that there is no such thing as a problem.

That applies to whoever gets elected, what laws that get passed, the taxes they say you owe, the killer asteroid headed our way, what the dog with the lifted leg does to your pants, or whatever.

You will live through all of those - or you won't. Not a problem.

in a large sense, this is true. it's wealth that belongs to the opposition. so why not pass laws that enable one to better take it?

the demo's live in the big cities, the repubs live in the rural areas of the nation.

so, where's the "equity" in all of that?

Since we are talking about generational wealth here, there is simply no risk in investing in the stock market. Nobody has ever lost money with a well diversified stock portfolio over a period of decades. Short term, sure. Over a period of one or more generations? The risk vanishes and returns approach the average.

Moreover, as 2008 has shown us, there is most certainly short term risks in real estate as well.

There is no flies on real estate as an investment, but over long periods of time, it is no less risky than stocks, and has some strong negative aspects, including poor liquidity, difficulty diversifying, and transaction costs.

Antlers you better subtract land taxes and insurance from your figure and also loss of any other interest you might have gotte. Edk