One of the biggest challenges in agriculture includes constantly changing laws and regulations. Roger McEowen, professor of agricultural law and taxation at Washburn University in Kansas, says legal challenges can make life difficult, especially when profit margins are tight.
“It’s when you think of overall risk management for a farmer or rancher, understanding how you might get yourself in trouble and get crosswise, for example, with a neighbor, get into a legal dispute with the IRS, that can hamper the bottom line. And so, the legal and tax issues, and managing those properly, are a function of the overall farm-ranch management strategy that can help your profitability. And margins are tight. They’re always tight, and this is one of the things that we want to make sure that we’ve got these screws tightened down on pretty good.”
Having someone to turn to when trouble arises is very important, especially when it comes to tax issues.
“The issues that are out there are tax issues. That’s just a constant issue – tax planning and tax management – and one of the reasons that’s such a huge issue is because the laws always change. Congress seems to want to fiddle with the tax code constantly, particularly when there’s a change in administration. That is one thing that’s on a lot of farmers’ and ranchers’ minds right now because we’re going to have a lot of tax provisions if Congress does nothing that will only last through 2025, and it’s a great uncertain area right now as to what it’s going to be starting in 2026, with a lot of that turning, of course, on the results of the fall election.”
Producers are already visiting with tax experts and trying to plan for potential changes.
“We’re starting to visit with farmers and practitioners. Tax preparers are starting to visit with farmers, and they’re fielding questions about planning aspects in the farm visits this fall that they will do that have to do with what we need to be doing now. Are there things that we can be doing now? Do we need to change the structure of our business? Do we want to put off deductible expenses if rates are going to go up? Do we want to prepay more expenses if we think the existing laws are going to be extended?”
Roger McEowen also teaches in the Ag Economics Department at Kansas State University and is a Kansas Farm Bureau Professor of Agricultural Law and Taxation.