A recent Q&A discussion on DTN looks at some possible changes to tax laws in the near future (Ask The Taxman). The author, Andy Biebl, is a CPA and tax columnist for DTN. Mr. Biebl addresses a few concerns from readers on where estate taxes and capital gains taxes may be headed in the not so distant future. Essentially, Mr. Biebl feels that there is a very good chance that we will see a jump in capital gains from the current 15% to a new rate of 20%. He also predicts that corporations will get hit with a 5% higher rate on dividend taxes.
With estate taxes, Mr. Biebl states that if Congress were to increase the special use valuation for farmland, most family farms would be able to fall safely under this threshold and avoid paying the higher estate tax rate.
The question, which pertains more to capital gains taxes than estate taxes, is how will this affect the farmland market? Will an increased capital gains rate cause would-be sellers to reconsider selling? Or will it drive more people towards a renewed interest in 1031 tax-deferred exchanges? It sounds like it is not if an increase in capital gains tax rates is coming, but when it is coming. Let us know your thoughts on how possible tax changes would affect you and your business.
