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Central NE | Income averaging has helped my tax situation alot lately, but helps more for a spike in income rather than dip. The reason is (as I understand it) you have to move an equal amount into each of the last 3? years. So next year, You won't just be able to dump it all back onto just 09's return.
To keep it simple, I would try to delay as many bills from this years crop production and next years crop production into January. Accrual accounting is no fun unless you LOVE accounting and the IRS won't let you switch back and forth. You'll be stuck there. If you were going to make any capital purchases yet this year, just wait till next.
One last thing, several years ago when I had a similar situation occur with Hay sales, the IRS was allowing a re-valuation of depriciated assets. I was able to take some machinery that had been nearly completely depreciated and (with evidence) re-list them at current value. That difference then went back on my tax bill as taxable income for the year, but I am still depreciating those assets today and will reduce my taxes for a few more years as I re-depreciate them.
That may come in real handy for the "Obama years"
#3 most definitely on a cash basis. They won't mind you leaving them off in 09, but hope you don't get audited in '10!
Edited by Hayinhere 12/16/2009 21:38
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Need some ideas for income tax planning.
