'Tis the time for year-end planning. I was actually about two weeks later than normal getting my books off to my accountant for his review. We will discuss purchases, sale of equipment, grain inventory, timing of 2013 crop sales, and the outlook for 2014 before I finalize year-end purchases.
I've talked to several dealers, despite the somewhat ominous outlook for the next couple years; they say sales have remained brisk. The unknown fate of the section 179 bonus depreciation is a driving factor along with good grain revenue from the 2012 crop. One question I have asked my accountant in the past revolves around the section 179. I understand using up the accelerated depreciation to lessen federal tax burden, but I question what will happen after section 179. If the limits are not raised again for 2014, wouldn't it be wise to carry some depreciation over to future years?
The last few years, low interest rates and good revenue has led to trading equipment more frequently. I look at these as "fixed cost" trades. If I am able to update equipment and keep my annual cost the same, known amount, I am all for it. It may cost a little more on a per year basis, when compared to running equipment many years, but that is offset by reduced maintenance, down time and risk (as the warranty is in effect).
As far as seed, chemicals, and fertilizer pre-purchase, I am slowly turning my thoughts that way. The fertilizer markets have softened in comparison to last year. It may soon be time to make that purchase as overseas action last week showed how quickly prices may rise. Fortunately, as I write this, it looks as though status quo is returning. I will probably purchase nitrogen in the next 10 days. Seed and chemicals have me baffled. Why should we expect increases? Don't they know that grain prices have dropped significantly from a year ago? Honestly these companies are perturbing me. I think I could use a few days away, in a warmer climate!