What is an agricultural appraisal?
An agricultural appraisal is a report of the fair market value of all agricultural assets on your farm or ranch. These can include buildings, fences, corrals, water assets, machinery, livestock, vehicles, conservation improvements, soil nutrients, and many more. This information can then be shared with the owner’s CPA or tax advisor to take advantage of all available deductions. The report is calculated based on the year the property was either purchased or inherited.
Why is the year the property was acquired important?
The IRS treats the assets as part of the purchase price of the property. If the property was purchased in a year prior to the current year, the assets must be valued in accordance with that year, since that was the year the property(and therefore, the asset) was purchased.
What about gifted property? Can I also use the deductions?
Possibly. The issue with gifted vs inherited property lies in the tax basis. When inheriting property, the tax basis is “stepped up” to the current market value. When property is gifted, the tax basis is still the original owner’s amount when they acquired the property. If this is significantly less than the current value, there may not be enough basis to take advantage of all the deductions. Keep in mind that the deduction cannot exceed the tax basis in the property.
Do you guarantee the amount of the deduction?
We can only guarantee what is in our control. While we guarantee the accuracy of our calculations, what the client and their tax advisor choose to do with the information is beyond our control. we do not give tax advice. We merely compile and present the information. Tax regulations and codes are subject to interpretation. The actions and opinions of the client, their tax advisor, or an IRS auditor are beyond our control and thus not guaranteed.
Can I pay the cost of the report when I receive my tax return?
25% of the cost of the report is due when the report is ordered. The balance is due upon completion of the report before the report is delivered. If cost is a major constraint, you may consider having a portion of your land appraised and having the rest completed at a later date. You are not losing any money, the prices used in the report are locked into the year the property was acquired.
Why should I hire Remote RanchHand(or another appraisal company) to do the appraisal? Can I just do the asset evaluations myself?
You can. However, as a general rule, the IRS isn’t a big proponent of people doing value assessments of their own property. While it is technically allowed, it is often viewed as a conflict of interest. A neutral 3rd party evaluation prevents this from being an issue.
Have your reports ever been audited by the IRS?
We have not yet had the pleasure of being scrutinized in an IRS audit. There are some other firms that state that they have been through audits with their clients. Keep in mind that just because an audit was triggered doesn’t mean it was because of soil fertility or even deductions at all. Just because their client was audited doesn’t necessarily mean that their report was fully scrutinized by the IRS. We fully document our calculations and will be there to assist you if you are ever the subject of an audit.
I looked at some other companies that offer the soil fertility reports, why should I choose Remote RanchHand?
We feel we offer a superior product for a lower price. We are completely transparent with our evaluation methods and formulas. We cite government and university sources as much as possible. We try to avoid using highly technical agronomic terminology which can be used to try to confuse and distract. Some of the reports we have seen from other companies lack crucial documentation. Some claim to use “proprietary algorithms” or “trade secret formulas” to develop their calculations. There is no such thing as a “secret” or “proprietary” formula when dealing with the IRS. You must be able to show exactly how you arrived at a value and the methods used to evaluate assets. We want our customers to be completely comfortable with the report and the process.
Is the nutrient deduction just for row crops?
The soil nutrient deduction also applies to land used for livestock and in some cases, timberland. We are based in an area that primarily is used for pasture and rangeland for ruminant livestock. While we specialize in pasture and rangeland, we can also assess row crop acres and land used for other agricultural uses.
How can I get more information regarding the soil deductions, non-soil assets, and tax deduction and depreciation information?
If you select the “Tax Information” tab on our home page, there is an abundance of information regarding all the deductions and how they can be used to maximize your return.
Can I see a sample report?
Absolutely. If you select the “Sample Reports” tab on our home page, you can see several full recently completed reports. They should give you an insight into the asset appraisal process and what you can expect.