So, welcome you to the income tax management for egg producers seminar. My name is Ron Hogan. I am a farm management specialist with the extension service. And we try to do this tax seminar every year for tax preparers and producers who want to keep up with the tax provisions. I wanted to say that we are recording this today just for your own information. And we have all of you muted. So any questions that you may want to ask the presenters, please type your question into the chat box. And so with that, I will get on to our first speaker. He is Alan Gregerson. He's with the IRS. He is the stakeholder liaison person. He's out of Bloomington, Minnesota. And he's been doing this for many years. And we've had him as a speaker for quite a few years now. So with that, I will turn it over to Alan. Thank you, Ron, for inviting me once again. My name is Alan Gregerson. I'm a senior stakeholder liaison from Minnesota. I do presentations around the area, including North Dakota and Minnesota and other states. So what my job is basically is to outreach presentations to practitioners, industry, all kinds of groups. And I also listen for, if you have any issues that the practice policy or procedure of the IRS isn't working, basically that's saying the system isn't working the way it should. And if we see those issues as a system issue, elevate them to me. I researched the manual to see what should be done. And we elevate that issue directly to the owner in the IRS. So it goes from me through my working group nationwide up to the top right away. So if you see something that's not working right, let me know. And my email is right down there, right away to start it out, alan.j.Gregerson at irs.gov. I'm an IRS employee for almost 37 and a half years. So I've been in the call site, I've been a revenue agent, I've been in the tax for education, I've been with electronic filing, I've been with outreach, I've done a number of things. So I have a number of friends in the IRS so I can kind of phone a friend inside if I don't know the answer. And sometimes I've had to do that because there's one side and another side and I had to resolve that. So I had phone a friend and that friend gave me the right answer. So I got the matter resolved basically on the answer. So what my purpose is just IRS updates to 145. I'm going to talk a little bit about the ERC and some, but again what I'm talking about, there's more slides than I have time to cover, but I think it's good material. So that's why I put it in there. So I'm going to be touching the slides, the important points on it. And so we'll briefly go over a quick review of the ERC. But then I want to talk about what we are seeing in the ERC and I'll talk a little bit about the Inflation Reduction Area Act. And I'll also talk a little bit about National Tax Security Awareness Week that's going on right now. So with that, continue on here. So we'll just go over the ERC overview kind of here. Remember the CARES Act, the Tax Relief Act, the American Rescue Plan Act, and the Infrastructure Investment and Jobs Act, all part of this ERC legislation. It tells you which quarter it applies to. So common question I get here basically in terms of that is where, which one is applying to what quarter. Well, this is a nice slide that tells you which part of the act applies to which one. And for the ERC, the Employee Retention Credit basically where that is for the employer to keep the people on the books as an employee rather than laying them off because of COVID situation. So there was a credit to allow for the employers to do that basically. So the employer types basically was an employer carrying on a trade or business, a tax exempt employer, tribal entities basically carrying on a trade or business. But it doesn't include government employees for 2020 and most in 2021 and household workers. So I did talk to some people in the audit area and one of the most, one of the air they said right away, oh, there's some government employers looking for the employee retention credit. Well, they're not eligible basically in terms of that. So those were in the audit area to be audited. Obviously it came back that they don't qualify part of the eligibility rule for ERC. So one of those started there. Over the eligibility request, full or partially suspended operations due to COVID-19 government orders. So there's got to be a government order out there or they had this requisite decline in grocery seats. And if it's a third and fourth credit basically in the 2021 year, if you meet the definite recovery startup business on here in terms of that. So those are the general eligibility. We can go in, there is more detail on it, but I just want to make sure you know the general rule on it. Again, the limitations 2020 was 50% up to 10,000 qualifying employee basically qualifying wages per employee. That's the QW and 2021 it's 70% up to 10,000. The maximum of 7,000 per employee per quarter in 2020 it was the maximum of 5,000 per employee for that period on it. And so we know that here there's certain information that's out there to clarify, but I'll talk about the key areas of the compliance, what the IRS is seeing basically. First of all, the employer may not use the employee retention credit wages if they're receiving certain other tax benefits or non-tax benefits. And that would be basically the PPP loan, the paycheck protection program that you can use the wages for the PPP loans, but you can't in addition use it for the ERC. If you use it for the PPP loans, can't use it for the ERC. But if you have additional amount after the PPP loan for the wages for the ERC, you can use them basically. And notice 2021-20 talks about that basically in terms of that now you want to make sure when you do have PPP loans that they have been forgiven through SBA basically on it here. Here's kind of a chart here says the number of loans here in terms of the PPP loan forgiveness. The number of loans of 11.5, number of loans forgiven, 10.6. So what that means is that we've had not every loan was forgiven. Maybe they didn't apply for the forgiveness process. Maybe there's something else happening. Don't know, but not all of the loans were totally forgiven. Now in terms of the audit, if the loan's not forgiven basically, it's income. So you'd want to make sure when you talk to your client, they went through that process and they got a PPP loan, they met the criteria. It was forgiven by SBA, otherwise it is income and maybe subject to an audit again. PPP loans are income unless they go through the process of SBA, Small Business Administration, forgiveness basically. Talks about the loan amount, so $758 billion was forgiven, there was a loan of $790 billion out there for PPP loans. Other wages, so if you're using it for PPP, you can use it, if you use it for PPP, you can't use it for ERC. If you're using it for some of these other credits, can't use it for ERC. And here's a list of these other credits basically on it. So if you're taking the working opportunity credit using wages in this calculation, can't use it for the ERC, so keep that in mind. And also, here's an important one to mention, I hear a lot of discussion on that. So you've got to reduce your deduction for wages on the business income tax return by this employee retention credit allowed on the employment tax returns, which would be your 941 series basically in terms of that. So you get the employee retention credit, you've had your wages on the books there, got to reduce it by the credit, the credit's going to be reducing that wages. I think this is kind of missed, and I think that's an item just to make sure you do look at. If the credit is later claim it on an amended employment tax return, the corresponding income tax return may also need to be amended to reduce this wage expenses claimed on the original return. So again, get the credit, need to do the reduction on the employee's wages basically on it here. The statute, there's kind of, I get questions on this a lot here in terms of that. For the ERC, the ERC for the third and the fourth credit quarters of 2021, and if you look at the IRC, the code section 3134L, basically that has a five year period of statute on it. The others have three years basically in terms of that. So if you're looking at that ERC in the third and fourth credit of 2021 and only that quarter, those quarters, they have a five year statute, otherwise three years. That's a common question that I see and people have, and a lot of people are not sure. They all think maybe it's three years for everything. No, there is a little bit difference for this third and fourth credit, fourth quarters of 2021 here. Again, if there's fraud involved in ERC, there's no specified time limit to assess tax and that's the code section that talks about it. Now what's interesting is that we do know there's fraud out there in the area and the commissioner has said that and we'll talk a little bit about that here. But I want to talk about why, what they're seeing, of course we've seen the first potential is that it's a government employee, government entity and looking for ERC and it's not allowed. So that's kind of one thing we see, but here's some characteristics of potential ERC fraud. And it'd be just to be aware of these in terms of that. This is what we see in terms of that here. We see fictitious businesses basically. So we see newly created after the CARES Act was enacted. So we see when it came in place basically on those laws previously on it. And then we look at to see when did this business start basically now? So we look at these indications. So some of them in these fictitious businesses newly created after the CARES Act was enacted. The employment tax returns file for preceding that precede the entity establishment date basically on it here. We see no corresponding income tax returns and we see no corresponding W2s. So if you're going to have the ERC, we know we're going to have to have some wages. We're going to have to have some W2. We're going to have to have some income returns. And we would like to see this entity is operating before this happened and not a newly created one. So again, those are things that we see of the potential ERC fraud that they are seeing. There's also potential ID theft in here as we see multiple original returns filed for the same entity. We see dormant filing history prior to the enactment of the CARES Act. So this entity is really dormant, not any kind of activity. But now it starts functioning just prior to the enactment of the CARES Act again. Now remember the IRS can look back on filing in terms of that. They have a lot of records and they can look back on different items to verify these claims. Also the entity is created under the tax or identification number or the TIN of a deceased person or somebody who is incarcerated in terms of that. So they apply for a TIN number basically on it. And that person, remember we put the name on there. We have a name blank on that for that, who it is, is somebody incarcerated. So again, those are characteristics of potential ERC fraud that we see. We also see inconsistent wage reporting. Now remember the W-2s tie out to the W-3s tie out to the 941 for the 4 quarters here. So if they all tie together a reconciled, that's fine. But if they don't, there's a combined and withholding report that comes out or called a CAR report. And we ask why these don't match. Well in these ERC frauds, there's inconsistent wage reporting on it, on those CAR reports. If they came out really quickly, we would see there's inconsistency on it here. So if the original or amended return is prepared by an individual or a firm that is under civil or criminal investigation here. And also if we see the area of significant payroll increase after CARES Act was enacted. Because again, we have a larger payroll increase basically on it here. That's going to impact CARES Act more than usual on it here again. So you're just kind of thinking, if a person would put in for it, they meet the criteria and you want to make sure you meet the definitions out there in terms of qualified wages, in terms of all the definitions that they have. It's in the right period. You meet all those technical words. That's what you need to do. So I asked the auditor here, it's always good to really have good information to show, yes, you met these terms, you've defined them, you've got the amount here from the books and records and you've done all that you need to prove that claim. You don't want to send a claim that you're missing a lot because then it comes back or will be not allowed basically. So you want to meet all the criteria that you need to in terms of that. There's also continued more rulings, notices that came out, ERC. There's one that comes out on, if you're in the supply chain, the supply chain basically. So the supply chain is interrupted. You're not getting your product. And so you have a situation where is that a government order or not? The supply chain has to have the government order to shut down to meet that criteria of government shutdown basically on it here. So we see some of those coming in as the supply chain was interrupted basically, but it wasn't because of government shutdown. So again, a lot of those here. So what we did is you see up in the top there IR 2023-169 is dated September 14, 2023. So the commissioner came out to protect taxpayers and scams. The IRS orders immediate stop to new employee retention credit processing, amid the surge of questionable claims concerns from tax pros basically. So if they were in before the 14th, they would continue to process those. But after that, to the end of the year so far as we know, those would be put on hold basically in terms of that on the employee retention program. Again, so they're aware of many claims for this credit were not proper meeting the criteria. I mentioned some of those things that they looked at and saw that they weren't proper. So they put a moratorium on these ERC claims. But they also came up with IR 2023-193. And this came up in October 19, 2023 is that that's an IRS release basically. So if you go on the web and put that number and you'll come up with this information, but it was October 19th, it came out. It is talks about an IRS announced the withdrawal process for employee retention claims. A special initiative aimed at helping businesses concerned with an eligible claim. So for example, maybe you said to your client, you don't qualify. But maybe your client went and saw these ads and went over to them and say, would I qualify? And maybe they did put in. Well, there is initiative basically on it here. If you meet the criteria basically, and it tells you what you'd need to do to meet the criteria in this, that you can withdraw it. Basically it's saying you can withdraw it here in terms of that. But if in the situation here, so let's look at it here, who can withdraw from the claims? Now it talks about it all in this IR 2023-193. I'm just going to briefly go on it. So it really lays it out how you have to do it, what you need to do basically in terms of that. But you can use this ERC, claim withdrawal process. If all of the following apply, you filed an adjusted employment tax return. That's a 941 basically, 943x, 944x or a CT1x. So you filed an adjusted employment tax return, amended employment tax. You claim the ERC only, no other adjustments. And you want to withdraw the entire amount of the claim. It's unpaid claim, or the claim is paid, but you haven't cashed the deposit. It talks about the different ways what you need to do in terms of the check or whatever. So it's either unpaid, haven't paid it, or you've been paid it, but you haven't cashed the check. And there's processes on each one, but it lays it out very specifically what you need to do. So there's really no questions, how do you need to document? But there is that special withdrawal process available so that it could be a help for you. We want to talk about internet platforms on 1099 filings. So now that you've heard basically, we used to have the information returns, the 1099 series and those information returns that come out, that it used to be 250 or more that we talked about the electronic filing in terms of that. Well, it's moving down in the 2023 tax year or when you file in the 2024 filing season, which you would in January, it will talk about that indeed it goes down to the number 10. So 10, any kind of combination of these 1099s up to 10 needs to be electronically filed. So you all heard most likely that the IRS got additional money, some of it has been taken back. But part of this was to set up an internet platform in-house basically to send 1099 filings. Now, we do have the file information return electronically or the fire system that continues on so you still can use that if you're using that and you're satisfied with how it does. But the new platform basically is a new one. It's kind of the new kid on the block basically on it. Now, I don't know if this will be consolidated as years go for enhancements come in, but I'm thinking it may in the future. It's not there yet, but there is what's called the IRS system, information returns intake system or IRS that is commonly on it. And this came in on beginning of January 9, 2023, used the taxpayer portal on it. So some of them you might have heard, some of them got in and they got their TCC code, their transmitter code basically that they need that generally takes 45 days. They got them and they started. So some did, but not a lot from my understanding. But again, this is kind of the first year that they'll probably be seeing it that they can apply for them. So you can key in the information to create a 1099. You can upload a CSV file in terms of the template the IRS provides. You can download and print the 1099, say create it to the recipients and you can electronically submit the 1099s by hitting submit button. You can file corrected 1099s. You can file extension. So it's an in-house one, no charge basically on it here that you can do. You've got to get the information, the transmitter code basically from IRS that takes 45 days. You can only transmit 100 per update basically per submission. So I could have multiple submissions, but in the future, we've got a system A2A basically on it that's going to allow you to go to the bulk process here if you have that loaded. So it's going to be kind of more and more functioning here in terms of that. It talks about that. The taxpayer first act is what authorized it, the IRS to set up a website. So some people think, why can't IRS do this? Well, first of all, they need funding and they have to be authorized by IRS to do things. And they were authorized to set up this website and they had money to do that. So that it's modeled after the business service online suites provided by SSA. So if you're aware of that, it's very much modeled after that basically on it here. And it talks about here some additional amounts here, maintain a record, prepare in file. So that's the legislative language that was in the taxpayer first act of section 2102 on that bill. Here's where it is basically current capabilities on that platform. You can create a user profile, support automatic extension, prepare those 1099s, store up and submitted data internally at IRS, review form data, corrected ones. So a lot of ways that it can be done basically on it. Again, it's a secure access digital identity. They must authenticate by a one time two factor authentication. Users will need to create an e-services account to access IRS and in terms of external service authorization in terms of that, it's similar, the application is similar to transcript delivery system, fire, affordable care, air act and so forth. Here is the 1099s that are provided. You can see there's a lot of them, a wealth of them. Of course, the ones you see most common are basically going to be the 1099 NEC, the non-employee compensation or the 1099 miscellaneous. And those are there, the 1099K or the payment card there. So there's a lot of good and 1099R. So there's a lot of good ones that can be done, the 5498, a lot of good information returns. Now, you can see here later releases, they're going to have ACA forms, FATCA forms, K1s, FinCEN information returns. So it's just beginning, it's just starting, but you can see they're going to kind of enhance it basically more for more information that can be transmitted through the IRS system. Again, here's the submission area talks about here, little detail. I'll leave that to that you can review basically on it gives you some additional information on it. A2A is that interface that allow ALK ones to more than 100 per transmission on it. Here's the publications where you want to find the information and here's the link. The publication is 57.7, IRIS portal basically 57.18 talks about that A2A specification for the BULK filing more than 1507.19 information returns. So you can go on iris.gov and put those publications number and you can review them. There's also websites basically here that provides additional information. You would obviously say www.iris.gov forward slash iris basically in terms of that. And it talks about the A2A application again basically here. And it talks about there's a website that provides an overview of the three different intake channels that we have, the fire, the air which is for you in terms of if you have insurance basically in terms of those forms that are sent to the employee and IRIS on it again. I'll talk about national tax security awareness week always be careful of what's happening out there. We have seen so many areas that the scammers are trying to get information here, whether they call, whether they email, whatever they do. We have a national security awareness week that's this week and maybe you got through the organization, you bled some information on it but you can go to our website. It talks about here just to be careful and I would always say maybe if your client comes in just have some link there in terms of iris, just be careful. This usually sends out letters before they talk to you. That's a generally we don't email, we don't usually call, it's always a letter first in terms of that. So you want to be always careful of giving your information. They can spoof numbers, all kinds of things so you want to be very careful on letting your information on it and it tells you some things here in terms of that. Stop on secured sites, make sure that update your security software update. Many people tell me they got personal security software that they pay for and they pay and they update on it. We get updates to our computers that we see periodically. All are helpful, strong passwords, multi-factor authentication. Be sure you do that, especially if you're in a remote location in terms of that. So it has information here on shopping online. It talks about written information security plan on it. We had a webinar on it. You can go to irisvideos.gov basically on it. It will be archived in about three weeks after November 30th basically on it here. It talks about publication 5708. Some firms have said, well, where can I get this? Well, there's a publication that has information on creating a written information security plan and we had a webinar November 30th. But all webinars the IRS does, subject matter experts basically on it. It's archived to IRS videos basically after that. You don't get credit but it's good information here in terms of that. So always make sure you're on a secure platform basically on it. I always check to make sure I make connection remotely that I'm on the IRS web here basically. I've got my VPN, all things that you make sure that you have proper with your authentication, all the things you want to make sure that you do to protect you as best you can here. You wear a phishing and impersonating schemes basically on it. There's information on it, again, identification theft central on iris.gov. So you as a practitioner want to make sure you're protecting that customer data. One thing I mentioned is you get an IPIN or special number for transmitting your return because maybe you voluntarily requested or maybe you had some identity theft. So when you as practitioner file that return for them, put it on at the last moment before that transmit. Some people practitioners that said, well, I had the IPIN in there basically and it still was hacked into basically, well, that file was there. It had that number on there before you transmit it. So use that at the last minute if people have that or if a number of your clients have that put it on at the last minute before you transmit it because they wouldn't know the scammers if it's right in there just before you transmit it. So that would give you additional coverage here. I just want to talk about Inflation Reduction Act, IRA basically on it here and I just want to highlight kind of briefly the information I gave you is a lot of information and it's good to refer to that. So I won't cover it all in detail, but I want to put some tips in here that I think it's helpful. Again, there's a clean vehicle, tax credit basically. Those are the code sections in there for new vehicles or if they were purchased later basically on it here, previously owned vehicle. There's commercial vehicle in terms of that. There's requirements that dealers and sellers have to do. And there's resources on iris.gov forward slash clean vehicle. So there's a wealth of information. One practitioner said had people come to them about clean vehicles, asked a lot of questions and he said there was a lot of information on iris.gov, these publications a lot out there to assist the practitioner and people to see if they really qualify for them. So use the resources. That's what we do. We get questions. We elevate. We try to get those information back on frequently asked questions so you can review those. I get a lot of questions on them. A lot of times I do a cut and paste right from it. I said it's from this link and it's from this question and here's the answer to you. Again, $7,500 if they buy a qualified electric vehicle, meaning it qualifies basically in terms of that. They change the rules again from 2023 to 2032. So if they don't take the electronic vehicle or the new clean vehicle credit right away, they still got time basically and there's going to be in there to 2032 unless it's got changed basically on its own to credit. And as we know, a credit is a dollar for dollar reduction if this qualifies here. You know as we know it has to meet the criteria and some of it is it's got to be for their own use not for resale primarily in the U.S. So basically it's their own use on it. We look at modified adjusted gross income. So if I'm a married couple, I have to be under that $300,000 out of also $225,000 or other filers, namely single or married filing separate of $150,000. So they can use our modified adjusted gross income for the year they take delivery of this electric vehicle or clean vehicle or the year before which has whichever is less. If the income is below the threshold for one of the two years, they can claim the credit. So it's kind of a nice thing there is somebody's income went way up. But the previous year was in this adjusted income limitation. They can do that again to qualified vehicle. It's a technical term purchased in 2023 or after it's got a battery capacity of at least six kilowatt hours have a gross vehicle weight of not of less than 14,000 pounds made by a qualified manufacturer undergo final assembly in North America. That could be Mexico, that could be Canada, that could be the United States. So it kind of gets kind of complex because now we're talking about battery capacity. And for me, I'm not so sure I know much about battery capacity, but we have some tools here that can help you in terms of, but it has to qualify. Here's what I really like is this website basically www.fueleconomy.gov, a list of eligible clean vehicles may be found at the federal government website. So if I had a client or as a taxpayer, I'd go there. I'd say what kind of vehicle I'm thinking about buying basically. Put that information in there and I put, I put that, I tried that just for my own information. I put in a vehicle that I probably won't purchase, but I just say, does it qualify or not? It was kind of interesting to go to. So a lot of times we have the IRS will have some sites that you can go to that will find additional information. So yes, it's an IRS credit, but again, we have additional resources on it here. So the qualifies, if they buy the vehicle new, the seller's going to, if the seller's reports are required information, and they've been getting the information out to there in terms of those, and the sellers are required to report the buyer's name and tax-free identification number, the TIN number to the IRS to be eligible. So you see what's happening? They're matching this information. It's kind of like the dealer sending out the information in terms of that. Does this qualify? And it's going to be impacting that. Be probably on the taxpayers' account that this information, if they do. If we know the income, it's got to be a qualified vehicle. It's got to meet that. It's got to be made in a certain one. Income, 80,000 for vans, sports, utilities, and pickups. It can exceed that, 55,000 for other vehicles. So I've seen people, very high income, saying, well, I'm going to go get that. I said, well, that's your option, but do you want to make sure there's modified adjusted gross income? There's limits on these cars.  Now it excludes destination fees if there's add-ons, basically, by the dealer in-house. Those are excluded, basically, but the MSRP is a retail price suggested by the manufacturer, including the options accessories installed by the manufacturer. So that's important on it. Here, again, it talks about whether it's a vehicle, confirm whether a vehicle is a van, see these links, basically, check line if a specified vehicle meets their requirement for final assembly. You can go to the Department of Energy on that. So again, some links use the VIN decoder tool under specific location based on VIN. So there's some additional tools. Again, the regulations were published in the Federal Register on April 18th, basically, in terms of that. Again, they also look at critical mineral in terms of the battery, basically, in terms of that. It's a factor in the credit here, basically, in terms of that. Here's what the employer, not the employer, but here's where the new clean vehicles that are purchased, that the seller is going to provide the information, the name and the tax rate identification number of the taxpayer, the VIN number, battery capacity verification that the taxpayer original use, name and tax rate identification number of the seller, the date of the sales and sales price, maximum credit allowed for sales after the amount of transfer credit, if it applies, and a declaration and a perjury from the seller. So you can see the seller must provide this information in terms of that. So we're going to have some kind of match going on it. How do you claim the credit? The form is 8936, basically, in terms of that, to claim the new clean vehicle placed in service in 2023. You're going to need the vehicle's VIN along with a make model year in place in service date. So again, here's previously one, basically, on it here. You've got to be the individual owner for use, not be the original owner, not claimed as a dependent, and not have claimed any other previously cleaned vehicle on it if you had purchased from somebody else. Your modified adjusted gross income is roughly half, basically, for that situation. And to qualify, you've got to meet these criteria. The sales price is lower, basically. You have to have a gross vehicle weight of $14,000, primarily used in the United States. Can't use it, use it in a foreign country. That's not going to work because that's not what the idea on it here. And it qualifies for this kind of this purchase from the dealer, got a purchase from the dealer, not an independent party for this second hand kind of or this lower amount on it that you purchase. Again, the required information it talks about, it's got to be sent out from these sales in terms that you claim the credit, previously owned vehicles, 8936, basically, there also is commercial vehicles on it here. And it talks about that 45W on the code, again, talks about here 15% of the tax basis and the incremental cost of the vehicle, the lesser of on it. So again, businesses and tax exempt qualify for this accredited here. Again, the vehicle's got to be a motor vehicle for purpose of Clean Air Act or mobile machinery on it here in terms of talks about more detail here in terms of you have the claim. So here's where you talk about updates, basically. It again is on the form 8936, basically, on it here and some criteria. Here's a wealth of information publications you can look at in terms of that. Just want to credits the residential one, 30% credit up to a 1200 annual credit for energy improvements, residential energy expenditure made during the year and home energy audits. They have to meet special criteria, also a 30% credit. Now we used to have that per year limit. Now it's per year, basically. It used to be once you took that limit, you're done. Now it's per year, basically, on it here. But you can see there's credits here. Talks about the doors, windows, and insulation, qualified energy audits have to be done by a certain qualified auditor and made suggestions. And heat pumps and boilers and stoves included, again, a 2000 maximum for the heat pumps, stoves and boilers, 1200 for those building envelopes, central air, water heaters, furnace and boilers, home energy audits. So you could have potential credit at 3,200 again. Talks about the energy efficiency. It's on the 5695. And with that, I'm just about right at my time here. So is there any questions showing up there, Ron? Yeah, no, I don't see any questions in the chat. Anyone have any questions for Alan? Just type them in the chat. So I'd encourage you to use my website or use my email. And this is a good PowerPoint that has a lot of good information if you're not aware of all those details. And I always go on the frequently asked question. Keep on Iris website on these clean energies. That's a wealth of information for you as a preparer or a taxpayer. Our next presenter is Rob Holcomb. He's with the University of Minnesota Extension. He's an educator out of Marshall, Minnesota. And he's been doing that for quite a few years. He does the Minnesota tax schools that he started in 2010. And he's also on the committee that works with the IRS, a national committee with other extension professionals on setting up the farmer's tax guide, Publication 225. So that's always a good thing to note. And so with that, I will turn it over to Rob. You've got one hour from now until 2.45. All right. Well, thanks a lot, Ron. Appreciate that. I won't belabor the issues here. I'm just going to go ahead and dive right into this thing. Because when Ron contacted me, we talked about potential topics and everything. And I probably got an hour and a half worth of slides. So some of this we're going to have to run through pretty fast. But there were some topics that I thought were very good to talk about. My standard, this is kind of one of my standard disclaimers that I use with, you know, especially with the farmer workshops that we do, I'm always encouraging, you know, for the producers on the call today, make sure that you're a good consumer of professional services.  The stuff where I'm pulling my information from here, of course, some of this is coming from the IRS website, but a couple of the other things that I'm affiliated with, the Land Grant University Tax Education Foundation, or as the acronym goes, Legudov. Now Legudov has made up 30 land grant universities and that puts out, that Legudov puts out the textbooks that we use for our tax courses. The RuralTax.org, also known as the Publication 225 Committee, Ron mentioned that earlier. The, you know, that's a website. It's actually hosted by Utah State University and RuralTax.org, I mean, we post, there's a lot of really nice material out there, especially, I mean, just now, recently, there was a lot of beginning farmer stuff that's posted on that website, so just be aware that there's information out there that we can look at. Now, in the amount of time that I've got with you here today, I wanted to spend a fair amount of time on this Corporate Transparency Act, which is the Beneficial Ownership Reporting, which is going to start in 2024. Alan can't talk about that because that's part of, you know, it's part of Treasury, but it's not part of IRS and we'll get more to that when we get there. But I want to talk just a little bit about soil fertility, I'm kind of glad I added that in there because I've had two fresh contacts this week where, you know, what's happening is when a farmer buys a piece of property, there are promoters out there right now that will contact the farmer, and what they're doing is they're trying to convince the farmer that they can do soil tests and somehow determine that they have excess fertility in that ground and take it as a deduction. And my comments on that are, I believe that there's a possibility where that type of a deduction can be taken, but I think the window is very, very narrow on situations where it's going to work, and we'll get more into that when we get here. Now, I've also over the last couple of years worked with, most of you are going to remember in, you know, passage of Inflation Reduction Act, alright, Inflation Reduction Act provided some debt forgiveness or rather at first they were ad hoc payments for financially stressed, distressed producers, and those were originally done as ad hoc payments. We had a real major 180 degree turnaround by Treasury back in March on the treatment of those situations, so if you have anybody in your book of business that had any of this debt forgiveness, I want to give you just a brief update on that. I want to talk a little bit about some expiring provisions that are going to affect everybody, and then I want to wrap it up with just some review, real brief review on what to look at for fall tax planning. So let's start off with this Corporate Transparency Act, and there's a lot of slides in my presentation, and I'm glad that Ron posted that because I'm probably not going to take a lot of time on a lot of those, but it's got, you know, that if you download those, that presentation it's going to give you some additional information that you can use as a reference down the road. The whole idea of this beneficial ownership reporting is really to combat money laundering, is what it is. Take shell companies out of hiding, you know, we've got the public law pieces here to this, but essentially all it's doing is it's, you know, we're putting some additional reporting requirements on certain types of business entities to try and eliminate the money laundering piece that could be going on out there. Now, as I mentioned in the introduction, this program is not going to be administered by IRS. It's administered by Finsan, which is the Financial Crimes Enforcement Network. It's part of Treasury, but it's not part of IRS. When we had, you know, Alan often, you know, Alan and one of his colleagues oftentimes teaches, helps teach some of our day one of our income tax short course, and when I talked to Alan earlier when we were planning the course, you know, he was not authorized to talk about this because it's not part of IRS. So they did, Finsan did issue some final regs in September of last year, and according to the books right now, everything goes into effect January 1, 2024. Now, in a nutshell, let me just, and first of all, before we light up the chat on this thing, let me get, if everybody would just hold on, let me get, let me get through this discussion, I promise I will pause at the end and we'll address, we'll address some of the, some of the issues surrounding this. Now, to my understanding, this is not an annual filing thing that has to happen. What, what, what, who, who is affected by this is anybody that has a business entity that had to go to the state secretary of state in order for filing, all right, which is going to include any of your, you know, single member LLC has to go to secretary of state LLCs, any type of limited liability partnership, S corp, C corp, anything where you got to go to the secretary of state, that's essentially what's going to be on the hook for this reporting purposes. Now, the timeline that we have right now that we, that, that we've been told is if you have a client that has a, a business entity that's going to be on the hook for this, if the entity existed before January 1, 2024, you've got the whole 2024 to report. You got, you got till January 1, 2025 to do your report, all right. So, so for entities that are already in existence on January 1, you got a whole year to take care of it. Now, for somebody that creates an entity in 2024, okay, you got 30 days from the creation of that entity to, to do the report, you know, in the, in the 30 days, the 30 days starts from that point in time that you, that you actually create the entity. Now, we did, we did day two of the short course yesterday for University of Minnesota and I did have somebody in the chat yesterday was saying that FinCEN was changing some of these threshold dates, but now I did some snooping around this morning when I got to the office because I knew I was doing this talk. I can't find anything on the FinCEN website that, that's, that's doing that. But the website might not have been updated yet. I, I get, you know, I have a couple of subscription services. I always get a ton of emails on Friday mornings to, to kind of update me on the week stuff. So, you know, maybe something will show up here tomorrow, but I'm going to stick with my 30 days on this until, until somebody tells me otherwise. But, but bottom line is, you know, the, the reporting requirements are pretty much pretty straightforward on this thing. So what we need to do here, you know, this is going to affect domestic companies that, that, you know, we're going to have to deal with. And essentially, it's that, it's that entity that the entity had to go to the Secretary of State for filing. So it's going to be your LLCs, any type of limited liability partnership, S Corp, C Corps. It's also going to include those, those single member LLCs as well. They're a disregarded entity, but they still have to go to the Secretary of State for the filing.  So you'll see that a general partnership is no sole proprietorship is no, unless these folks have done the check the box option to get taxes, the corporation. Right. If they did that, then they are on the hook for that. So, so, so largely, you know, I always try to get things as simple as possible when, when doing this. Now, we taught this extensively in our ag tax course back in October. And I guess in our ag tax, ag tax textbook, we had an extensive list of 23 different types of entities that were going to be exempt from this. My, our comment during the ag school was the exemptions on this are not going to affect very many people. So if you're hoping to, to find a lot of exemptions where, where your folks are not going to have to file this thing, good luck. I just don't think that's, that's going to be the case. You know, accounting firms are exempt only if they're, you know, registered with a public accounting oversight board or you got over $5 million worth of gross receipts. And the thing is, once you get that big, you've got other reporting requirements anyway. So, so it's, it's not that big of a deal. Already talked about the deadlines for the, for, for filing these reports. And, you know, plus, you know, but, but, but again, my understanding of this is that this report is not something that's going to have to be filed annually. It's something that you file and you don't have to update it until circumstances change to where you need to update the information. All right. And, and there could be a number of things along those lines. Primarily the company changing structure or possibly some, some beneficial members that change in the organization. If you've got a death of a beneficial owner, the timeline on that starts at the time that the estate is settled. And let's see. Yeah, we've already talked about that. Now, what has to be reported, of course, fully, fully legal name of the, of the business or doing business has address, plus any tax ID numbers that, that are going in here as well. Now, the other thing that currently what's, what's on the books for this thing is this bottom bullet that you find here and you are going to have to have a scan or a picture of a driver's license or a passport or some type of approved identification for all the beneficial owners. All right. And, and, and that number changing on the driver's license would warrant having to update the, the document. Now, I don't know about North Dakota, but now in Minnesota, when I get in, when I get my driver's license renewed, my driver's license number doesn't change. All right. My driver's license number stays.  So, so, you know, we just drive on with that. But, but if you got a state where the number changes every year that they issue a new driver's license, that's going to trigger having to refile this thing. All right. Already talked about this app, you know, when this has to happen. Okay. So another question I'm sure everybody's buying is who is a beneficial owner? All right. There, those are the folks that have substantial control in one of the entities that we talked about earlier. All right. And that's defined essentially by if they have more 25% or more of a controlling interest in that, in that company. All right. So you got a bunch of people with 10% interest, don't worry about it. It's, it's that 25% that seems to be the threshold in the, in the, the stuff. Now, you know, more, more material, but I think the main thing that to, to watch for on that is the 25% the 25% rule.  There's all kinds of penalties out there. Folks, you can see what, you can see what's going on here. $500 a day or 10 grand, you know, they are put some teeth into the, into the, into the penalties that come out here.  Now, I do not want anyone to walk away from this thing and say that, well, Rob said they're going to kick the can down the road on this thing. That's not what I'm saying. Uh, you know, Fin San has requested that this be delayed, the implementation of this be delayed, but, uh, we have no word on that or anything yet. So, so, uh, I think, I think the prudent thing for everyone to do right now is when you meet with clients in the fall in form, you know, it's real easy to earmark the ones that are going to be affected by this. What you need to do is you need to let them know this is something, this is some additional filing we're going to have to do during 2024, get them up to snuff on the thing. And this is probably one of those summer projects that happens after we get beyond filing deadline. And, uh, so I think, I think what, what we need to do right now is educate everybody and let everybody know this is something that's coming, uh, down the road. If it, if the can gets, gets kicked down the road, well, the can gets kicked down the road. But, but as of right now, I think we got a plan on doing it. Now, uh, more resources on this, uh, the, uh, if folks, this is an awful link, uh, in, in the material. I, you know, what, what I've done since I made this slide set up is if you just go to a Google search engine and you type in Fin San, beneficial ownership reporting, it'll take you right to the site where all this stuff is. Uh, and it's, and there's, there's all sorts of, I looked at it this morning, uh, there's, there's Q and A. It's, it's, it's really fairly well laid out, uh, as far as where the information is located. Now, they also have put out a, a, a small entity compliance guide and that's posted on this, uh, Fin San website and that link, that link that I have up here, that is a good link, uh, that, that, that was just recently updated. But what the, what the, uh, compliance guide is, is going to be doing is it, uh, you know, it has the updated, it has the updated FAQs in there. Uh, it's supposedly written in easy to read language, answers key questions, has checklist, infographics and other tools to kind of assist you with, uh, with compliance issues. Now, just a, just a couple of the, of the pulling together notes on this thing. You can't access this site yet. I, I confirmed that this morning when I looked at the website, first thing when I came in here to the office, the, uh, the, the site is supposed to open up January one and, uh, you, you will have to register as a, as a preparer in order to, in order to, to go in there and do these reports. We don't know what any of this stuff is going to look like, uh, as of yet, but, uh, but just to recap the main things, you know, my understanding is that, uh, that this is a, uh, you know, you file the thing and you don't have to worry about filing the thing again, unless something changes with the company, uh, like an owner or, uh, you know, an owner or, uh, that ID number, the, the other thing I read was that that driver, if that driver's license number changes and you upload that, that triggers having to refile the, uh, the paperwork on that. So, uh, we just open up the chat here real quick and see whether we've got anything. Yeah, Rob, you got a, you've got a question there, uh, you can see, uh, on the, on the pin, Sam, did you see that question? Yeah, I'm, I'm, I'm open and I'm kind of scrolling the thing up here so I can see. Okay. All right. So, yeah, this is what was reported yesterday. I just haven't had official word on this. What, what changed folks? Uh, this, this is confirming what I heard yesterday. The, uh, okay. Go, going back, I'm not, uh, let's just back up to the, what this is telling us is that it's changing is, um, this, uh, where, you know, something changes if you create a new entity, you got 30 days to, to do the filing. That's now going to be changed to 90. All right. So that, that was, that was actually reported yesterday. Uh, so that's, that's where, that's where that's going. So I, I think, I think that kind of confirms that, but I, I still like to kind of get that stuff from my reporting sources early. So I think that's the, yeah, and I agree, the ad, you know, as a comment here, ad, address, change, triggers, refile, I agree, you know, anything changing with the, uh, anything changing with the, uh, with the company in general. All right. Uh, I anticipated that was going to burn up a little bit of time and it did. So, uh, let's, let's, uh, drive on here. The, the other thing, I don't want to talk too long about this, but, uh, on this residual soil fertility issue, let's, let's just kind of talk about this a little bit now. Now, uh, Ron, Ron and I haven't talked about this, but this is something that really is almost getting out of hand here in Minnesota. I don't know about North Dakota, but, uh, this is, this is a issue that's been around for several years. What, what the whole idea is folks is, uh, somebody along the lines concocted this idea that when you buy a piece of property, you could have soil tests done on that, on that ground. And if you can determine that there's excess fertility in that ground, you can take that as a deduction at the time of the, that you purchase the ground. All right.  Now, this is really about the only guidance that we have to go on this. I, I have, I have stood, uh, I have been in the meeting with IRS in Washington, DC, and we've talked about this issue and I've flat out said in the nation's capital, the best thing that could happen is we need a, we need a court case on this thing so that we get some guidance on, on how to handle this thing. Now, what the TAM says in order for this to work is you've got to be able to establish the president and extend of the fertilizer. So if, unless somebody did soil tests at the very beginning, when they, when they bought this property, I, I think it's a, I think it's a dead issue. I mean, if you don't have any soil tests and somebody calls up and says, oh, we can go back and we can retroactively create this. No, you can't. Uh, you need soil tests at the time that the transaction occurred. The, uh, you need to show that that soil fertility level was attributable to the previous owner. And the only way you can do that is doing a soil test at the time purchase. All right, you need to be able to show based on the soil tests that, uh, that the ground has an increased or higher than normal level of fertility. All right, now you're going to have to contract with an agronomist on that. I'm, I'm farm management. I am not an agronomist. Uh, most of our, most of our land-grant universities are going to have, uh, soil scientists that can, that can kind of examine that and they can, they can provide some guidance as to whether, you know, what's a, what's a normal level of fertility in that regard. But what you have to show is you have to show that you have more than normal fertility in the ground. And number four, which I think is the hardest one to prove is you have to provide evidence indicating the period over which that fertility is going to be exhausted. Now, the way I read this folks is, uh, I interpret this as the equivalent of a depletion deduction, meaning that you're just the fact that you have extra fertility in that ground doesn't guarantee you of a, of a, of a deduction. You need to be able to show that those fertility levels are going down to treat it as a depletion deduction in order to get the, in order to be able to deduct it. Now, here's the problem. All right. And I've seen this over and over and over again. Farmer buys a piece of property promoter contacts these people.  We got extra fertility. We got extra fertility. Folks, what's the first thing that they're going to prepay in the fall that the year that they bought this stuff? All right, they're going to claim that they have excess fertility, but they're going to go and put more fertilizer on there as a prepaid expense. Now, Minnesota department of revenue has been very aggressive in auditing these things. And that circumstance that I just described is one of the more common ones that they'll throw the thing out. And, and, and frankly, you know, under those circumstances, you know, I'd really without, without some additional guidance coming in from, from internal revenue, I've really got a lot of problems with, with, with folks, you know, paying a promoter and taking this deduction. And one of the things that I also want to point out, I'm not trying to scare anybody on this, but, you know, I occasionally will get contacted by IRS and largely because I have a reputation of looking at an issue and evaluating an issue in a fair and unbiased manner. This is on IRS's radar. I've been asked to participate in a couple of, in a couple of calls with, with, with IRS staff at the national level. And this is, this is now on the radar. So, so I, I'm telling everybody, kind of be careful with this one. I wouldn't, I wouldn't be doing this unless you really got your ducks in a row. And, you know, in my opinion, I think you need to have more than one soil test, and you need to be able to show that those fertility levels are going down. If you've got that situation, then I think it's a slam dunk. And I don't think anybody's going to be able to argue with you about that. But, but if you just do one soil test and just, and just amortize portion, a portion of that purchase price out there, I don't think you got much of a leg to stand on. Now that's, that's enough for Rob soapbox on that thing. I don't see anything in the chat box. So I'm going to go ahead and drive on here on this. Now, real quickly, because I do understand that this is probably not going to affect a lot of folks on the call here. But at least I want to make you aware of what's going on with this thing, in case, in case you happen to encounter this, the, you know, under inflation reduction act. We did, there was a provision where folks that had that were delinquent on FSA loans, were going to get some, they were going to get some debt relief. Now, the debt relief was going to be in the manner of ad hoc payments. And those ad hoc payments showed up on a 1099 G that were reported, they were reported as a farm program payment. And it had to get reported on, on schedule F. And it was, it turned out to be taxable income, right? That's the way these were originally treated. And I've got a picture of the 1099 G. Also there would have been a, there would have been a 1098 that came in there because there was, there was a some interest split out when those, when those payments were made. Now, the whole impact of this folks was the, the average for the debt relief that occurred nationwide, I think the average payment was like $70,000. So and most of these were smaller operations. So you have a smaller operation, all of a sudden you drop $70,000 into their, into their lap and make it a taxable payment. It was good. It was going to cause, you know, some tax planning issues that they had to happen. So one of the efforts that I had educationally last year was, you know, I did, I did some national webinars just kind of trying to trying to educate some of these smaller producers, because a lot of them, let's face facts, we're not the best brook keepers in the world. We were trying to, you know, let them know, all right, you know, you need to do something to help mitigate this. Otherwise, you know, you're going to have a substantial tax bill on this thing. So here's paid that that ran along all of 2022 up till we got into March of this year. All right. Then all of a sudden my email box starts lighting up. Well, here's what happened Treasury and IRS through, you know, with to go through negotiations with Farm Service Agency, they did a complete 180 on this thing rather than the folks that had the folks that had direct loans. The they were, you know, the these were for direct loan borrowers. They the ones that had received the ad hoc payments that had been reported on 1099 G what they did is they did a 180 and then they decided, all right, we're going to we're going to change this. We're going to issue corrected 1099 Gs with zero dollars. And we're going to issue 1099 Cs and reported as cancellation to death. Right. This all showed up about March of, you know, mid middle of March of this year. And some folks had already filed returns. Other returns were in the process and everything. And it really created a mess. All right. So what we ended up with is we ended up with with new forms. And and and this this is from the producer webinar, folks. I know, you know, most of most of this group is going to know what what what the corrected box and where the ag payments are are reported in and the 1099 C is going to show that amount of that amount of debt that was discharged. So the the whole issue here is and I don't want this to turn into a too big of a discussion on cancellation of debt. But remember, with the cancellation of debt, you've got to reduce tax attributes, you know, we can we can get out of reporting that income either through insolvency or qualified farm indebtedness. So odds are between those two things, you know, we're going to we're going to at least qualify for being able to if if we have some some tax attributes that we can reduce. Now, remember, that means, you know, if they've got an NOL, we got to reduce the NOL, we need to reduce business credits or we need to reduce basis and assets. All right. And if they don't have any of that stuff, to reduce, it doesn't do you any good. I mean, with without without the reduction of the tax attributes, that cancellation of debts going to show up as taxable income just like it did on on the 1099 G. So so so for some folks that this affected, it really didn't help them out that much. Now, the day we already talked about that. So here's kind of the rubber hits the road part of this. All right. If they already filed the 2022 return and then all this paperwork showed up, they need to look, they need this, they need producer needs to sit down with tax preparer and determine all right, is changing this for cancellation to debt going to do us any good if if they reported it at all as farm income and the cancellation of debt form showed up and it's not going to do them any good because they don't have any tax attributes to absorb it. They can just leave the return. They can just leave the return the way it is. IRS is aware of this issue. They don't have to file an amended return. They file an amended return if it does them some good to take it as cancellation of debt. All right. So the other thing worth noting is that if they had this cancellation of debt, they are still producers are still eligible for USDA loans and programs. All right. So that's that's a key key element to this. Okay, let me look here at this. So fertility creates ordinary income for seller in the amount of claim for purchase. Yes, the Mr. Irwin key point here is that, you know, if they're doing this soil fertility, it's a good idea for this to be in the purchase agreement. So the seller is treating his ordinary income and that makes it a lot better to that makes it a lot better on the on the other side. Order, there is an order for reduction of tax attributes and I would have to look that up to give you the exact amount. But but if you look at the if you look at the cancellation of debt forms, it pretty much has that on there. But yes, there is a there is an order on that. All right, let's move into sunset, sunset items here and one second here, I'm looking at the clock and I got a kind of I got a crank here. Now stuff that changed in 2022, that stuff that's already in the book. So it's just it's kind of skip over that. Now these are these are provisions that are set to expire at the end of 2025. Remember, this is stuff that's going to expire that go off the books for the, you know, this this was all from the Tax Cuts and Jobs Act. So once we get once we get to 2026, those lower individual tax rates and also the, you know, thresholds for all those are going back to the old rates index for inflation.  We lose QBI once we get to 2026. Plus the, you know, the employer provided meals, personal exemptions return, the salt limit ends, home mortgage deduction, you know, limit increases and we get miscellaneous itemized deductions back. Now the stuff that's permanent out of this, that, you know, don't want to get anybody's hopes up, there's no provision in here for like kind of exchanges for real for personal property is is still going to, you know, we're still going to be, we're still going to have to do sales and purchases for machinery trades. Alright, so, you know, like kind of exchanges are still going to be only for real property. Vehicle depreciation lists those stay on here. The NOL restrictions, cash accounting and the depreciation rules for farm machinery, that all stays the same. Alright, in that regard. Now, real quickly want to talk about QBI here for just a moment, I actually should have had a should and this is slightly out of order. I moved, I pulled the QBI slides ahead of tax planning because that's kind of where they belonged. But now on QBI, we only have QBI through 2025. It goes away in 2026 unless somebody changes something legislatively on. There's two different deductions. There's the 199 cap a small A that's just the 20% of of of business income or qualified business income that gets reported on the return. That's you know, it does not reduce self employment tax, but it shows up as a deduction. Alright, there's also the 199 cap a small G. Now that's kind of the equivalent of the old D pad credit that comes through from co ops and it's now reported on the 1099 as 199 cap a small G. It's it's the pass through QBI that that the farmer gets. If the co op decides to pass that through and the co op board has to elect to to do that pass through. It's not an it's not an automatic type of thing. Now the. There there are thresholds where you start to lose QBI once you go above those thresholds at the bottom of the slide. And if you go above the threshold, then you got it. You got to have wages and basis and assets in order to to get a QBI. So it's it's a little more calculation if you've got a high income earner on this thing. Now this is the redid discussion. I wanted to remind everybody don't forget there's a reduction deduction. If you're if you've got a client that's doing business with a co op. You have to do a reduction of the cube. You've got to reduce the QBI by either 9% of the QBI 9% of the QBI attributable to the co op sales or 50% of the W2 wages allocatable to the co op sales. All right now the the key element to this is is if the farmer doesn't have any wages, if they're not paying any W2 wages, then there's no reduction. All right, because it's the lesser of those two. And if you if you got no wages, well, the lesser of zero is zero. So so that that's the simple way of looking at that. So just that's just a quick reminder on that. Oh, yes, correct. Yeah, that well that that was actually never adjusted for for tax cuts and jobs act never messed never messed with the maximum for 179 anyway. So okay, good, good, good, good. Point well taken point well taken. Yeah, let's drive on here. This is a chart that I have used for probably close to 20 years. I kind of stole it from a stole it from a previous stole it from a previous colleague. I just noticed this doesn't have the 2023 chart in here. But anyhow, it gives you this gives you the rough idea here. The I've got a version of this where I've got the 2023 rates in here, which the whole idea of this is is, you know, looking at this, this is something that I typically print off for clients when I'm sitting down doing tax planning. And it's a good visualization of what's happening with the rates. Now this assumes that all the income is farm income, but but it still does a nice job of explaining everything. The blue line is just your income tax rates. You got a 1012 and this is all married filing joint 10, 1012 22. And then the orange dotted line is your self employment tax running at 15.3% out to, you know, in this year, we're out to about 160,000 were jump or drops down to the to the 2.8, but you pay the 2.8 out to infinity for business income. The green line is just add everything up. So this doesn't take into account state income tax or, or, you know, state income tax or knit or anything like that. It's just basically showing you when when you sit down with a client and you add up all the income, add up all the expenses before you start looking at accelerated depreciation and prepayments.  You know, if you got somebody that's out here in the middle of the green hump. Well, that's that's a pretty high. That's a pretty high rate.  And so, you know, if you get somebody here, I, I normally like to spend more time and pay more attention to the rate than I do looking at the total dollars. All right. And, and because of, you know, somebody is here, and we want to prepay them down to here. Well, essentially, there's they're saving about 37 cents on the dollar for everything they prepay from here down to here. Now, if they're prepaying from here down to here, it's not they're not saving as much per dollar that they're prepaying thing. Are they reducing their tax bill? Absolutely. But, you know, is that the most efficient way to to look at that? That's that's probably a, you know, different group that needs to look at that. On the tax planning strategies, just kind of looking at, I got about 15 minutes left here. On, on the tax planning strategies, you know, we'll talk a little bit about prepaying expenses, income averaging, deferring income, accelerated depreciation and crop insurance deferral. So that's, that's what I've got here for the left for the remaining portion here. Now, on prepayments, the general rule of thumb on prepayments is that you can, you know, you can prepay stuff that you're going to be using for next year. The thing is, is that you can't, it needs to, you know, what you're paying for can extend the benefit of it can't extend beyond either 12 months at the end of the following tax year. Alright, so the example I've got on the slide here, somebody in November is paying a one year insurance premium in November, no problem deducting that in November because it only goes for 12 months, you know, and it's it's either going for 12 months or before the end of the following year.  So, you know, that's that's one thing I always send send folks off to, to take care of. Now, the general rule on prepayments is if you look at the schedule F, including depreciation on the expense side, you just, you know, you're looking at total expense, chop that number in half and that's what you're allowed to prepay. All right.  But you have to be a farm related taxpayer. Now, the farm related taxpayer is pretty much defined in the farmers tax guide. You got to be a, you know, taxpayers main home has to be on the farm, principal principal business is farming, or they got to be a member of the taxpayers family that's part of the farm family farming operation. So, so if, if that's going on and you haven't gone over that limit in the last three years, you can exceed the 50% for one year. Now, I always am real careful to try and make sure that we don't go over that 50% limit because, you know, I just don't want to be flirting with that. Now, on prepays, this is by far the most important slide that I'm going to share with you. Good review. Pre payments, you got to have a payment.  All right. You can't just go to the co-op and put money on account. I've, I've had folks, you know, when I was with the association, they'd come in, they'd hand me the, they'd hand me the co-op statement and it would say right there, money on account. In fact, they were getting paid interest for, you know, for, for having that money on account. I mean, that's not going to fly as a, as a prepayment. Now, we've got a business reason for doing this. Oftentimes producers are going to get discounts for buying stuff in the fall. So, so, you know, we're, we're fixing price and we're also assuring ourselves of the supply. So, you know, so we've got good business reasons for doing this. The, the, the IRS guidelines in pub 225 and in the treasury regs, it does tell us that we can't materially distort income. But if we're prepayin' every year and it's part of our normal business practice, we're not, we're not materially distorting income in that regard. All right. Income averaging. Let's look at the, uh, okay. Can a farm, can a startup farmer first year prepay expense in 2023 and take a deduction in 2023? I probably wouldn't. Okay. I'm assuming that they're starting in 2024. They're going to generate an NOL in 2023. I'd probably stay away from that.  But I probably would avoid that. I mean, you're going to, you're going to generate an NOL if you're, if you're doing that. Uh, income averaging, uh, filed on schedule J. Now, uh, schedule J is the income averaging form. And what, uh, in IRS by their own, by their own admission is going to, uh, say that this is an underutilized form. All right. Now, the whole idea of this is, is that, uh, you can only do schedule J for farm income. It has to, it has to be farm income. It doesn't affect self employment tax and it doesn't affect taxable income. All it's changing is the rates. All right. So here's an example where this would work out. Okay. Uh, let's say for instance, we've got, you know, what we do is we look at three prior years. Now this line right here is supposed to symbolize the top of the, the top of the 12% bracket. Now I realize from year to year that, that top is going to, is going to notch up a little bit due to inflation, uh, adjustments that we get every year in the brackets. But, you know, for, for, for, for simplicity purposes, I've just got it as a straight line right now. Now the point is, is that we had unused 12% bracket here, here and here. All right. Now let's say we got a whopping income here in 2023. What we can do is we have to put, put an equal amount back into the prior three years. You can't load up one year and de, and lower amounts in the other two. You have to put an equal amount into the prior three years. So what we're doing is we're taking some of this 22% money and we're putting it back into these prior years and taking advantage of those unused brackets. All right. So that's the whole idea of income averaging. So, uh, but it's done on schedule a, uh, some software does a better job of analyzing that than other software. But, but it, but it nevertheless is, uh, you know, is a, you know, it's it's a powerful thing. It isn't going to reduce self-employment tax. All it's doing is it's really blending your rates, but it definitely can help, help on that tax liability. Okay. Crop and livestock deferrals. Let's talk here just a little, just a little bit on this, uh, you know, I'm in the short rows and I'm under 10 minutes here. So I got a hustle. Um, all, all we're talking about when we're doing livestock to crop or crop deferrals, all we're doing is we're just postponing sales into the next year. Now I want to clearly, I want to clearly differentiate between just deferring sales and doing a deferred payment contract. Those are two completely different things. All right. Now if, if, uh, if you've got somebody that, uh, that, that could, you know, they just forward contract something and they're going to sell, they're going to sell grain in February. Well, that's just, you know, it's going to be a cash sale in February and it's not going to be income for the, for the current year. Now, of course, this doesn't work for accrual basis filers. We're only talking cash, uh, but, but we got, you got to be conscious of those constructive receipt rules. You can't go to the co-op, run the, run the, uh, truck of grain across the elevator and then just tell them to hold the check. All right. That doesn't work. That's, that's constructive receipt of income. You're going to have to take that as income at that, at that time. Now a deferred payment contract, that is when you enter into a contract with the buyer that says, I'm transferring the ownership of this commodity, but I'm not going to get paid normally this time of the year. I'd have, I'd have the contract where I'm not going to get paid to like the first week of January. All right. So I'm deferring and those are allowed under the installment pay, under the installment method rules. So, so that is, that is perfectly allowable to do that. My one cautionary note that, uh, that I issued everybody on, on an annual basis is that when you do, do deferred sales under a deferred sales contract, you are an unsecured creditor, meaning that if something happens financially to that business that you entered into that contract with, you're the last person that's going to get paid out of the bankruptcy court. All right. So, so just be aware of that, that that's the risk involved in these deferred, in these deferred payment contracts. Now, I'm guessing that we've got some folks that these, uh, you know, whether related livestock sales this is going to affect. And, uh, the reason I say that is we had widespread drought all across the region, uh, this last year. And, uh, some of these provisions require a federal disaster declaration. Others do not. So, let me just touch on the, the two, the two categories with related to breeding livestock. Now this is going to, for, for North Dakota folks, this is going to, you know, 99% of the time this is going to be affecting, uh, a cow-calf producer. All right. So, you got a cow-calf producer, they got, they got a, they got a herd of, of, uh, mama cows. They probably have a normal cull rate that they have on their herd. All right. Now, if you were in an extreme drought area, no hay, no grass, and the producer ended up selling a higher amount of breeding stock in a given year than what they normally would because they didn't have feed, that qualifies under the, the breeding stock deferral. All right.   Uh, but, uh, but what you can do by doing that is you can postpone, uh, having to report the sales of those things. Now, that's under, that's under a 1033 deferral is what that is, uh, to, to give you the, uh, to give you the code section on that. Now, you don't have to have a disaster declaration to defer those breeding stock animals. Now on the raised animals. Okay. Let's talk raised animals here now. This would be in the calf case. This would be the calves. All right. Say I have a normal marketing, uh, pattern of selling a certain number of calves every year. All right. Maybe I'm, you know, selling a certain number of calves. The other ones I'm holding back to for yearling weight, uh, you know, due to weather related circumstances, no feed, no grass, et cetera, et cetera. I sold a higher percentage of my calves in any given year than what I normally would have done. All right. That's deferrable under, uh, code 451, but, uh, the difference is, is that I've got to have a federal disaster declaration either in my county or in adjacent county in order to be able to do that. All right. So now on these defer on this on these, uh, livestock deferrals, what I would encourage you to do is if you're needing more information on that, check out the rural tax dot org website. There's really good facts. There's a really good fact sheet on, uh, on those posted there. And that's where I, that's the first place I would send you on that. Uh, last thing that I've got here, uh, before I, uh, in my last three minutes here is this deferral of crop insurance. All right. Now, crop insurance, um, anticipating with, with the drought situations that we had this last year, I'm anticipating that we're going to have a lot of producers that are going to get some crop insurance payments. And, uh, we want to talk about how to handle this thing.  So somebody that's doing a cruel, sorry, you're out of luck. Um, but, uh, you need to establish under normal business practices that you would have normally sold those crops the following year. Now on the crop insurance, one of the point, one of the key point to remember is you cannot defer revenue. All right. Most producers nowadays are buying these hybrid, uh, policies where it covers damage and destruction, and it also has a guaranteed revenue portion of it. Right. If they're getting a payment on, if they're getting a payment based on revenue guarantee and not damaging destruction, that revenue portion is not deferrable under any circumstances. All right. So, so note, note that the, uh, here's the, there's a revenue ruling from 74 plus is supported by Nelson court case in 2008. But, but what this is showing or what this tells us is that, uh, crop insurance deferral, and I do not agree with this interpretation, but this is the way it gets enforced. The, uh, on crop insurance deferrals, you need to look at each commodity. Right. So if you got a client that's growing corn, beans and wheat, you need to look at the corn sales. Are they normally selling over half the corn the following year? Then you look at the beans. Are they normally selling over half the beans the following year? Same thing with the wheat. If they're, if they're selling over half of all the commodities, looking at them each individually into the next year, then you're eligible for the crop insurance deferral, but it's all or none. All right. If you're, you got one of those commodities where they're selling it out of the field, it poisons the well and, and you're not eligible for any deferrals. All right. I, I, I do not agree with that interpretation, but that's, that's the, that's the rules that we're, that we're living with right now on that. Okay. Uh, folks, there is the thank you. There's my contact information and Ron, according to what I'm looking at here, I got one minute. So, uh, I went through some of that pretty darn fast. I don't see any questions. Uh, you answered questions kind of on the fly there, but I don't see any questions in the chat for you right now. So, okay. All right. Well, and folks, I'll hang on. I'm planning on being on here till four o'clock. So if something else comes up, I'll, uh, you know, I'll be, I'll be happy to chime in the, in the chat on that and, uh, and everything, but there's my contact information. The only thing I would say about, uh, contacting me this time of the year, I travel a lot. So, uh, you know, I would recommend email, try and email first. Don't, you know, there's, there's a lot more days I'm going to be out of the office than this next month than what I'm going to be in. So email is probably a better option. So thank you. Now we're, we're, it looks like our technology is working. I want to introduce where our North Dakota Tax Commissioner were privileged to have him speak today. Uh, he was recently elected to his office in 2022, but prior to that, he was the Public Service Commissioner in North Dakota. And, uh, and he wears many hats as the, in the department, uh, the tax department in North Dakota, property taxes, sales taxes, and he's got his income tax hat on today. And he's going to talk a little bit about some of the changes that happened to North Dakota taxes. All right. Well, thank you very much. Appreciate the opportunity. Good to be here. And, and it's been, been an interesting discussion so far. I love the, the previous two presentations. But just as an overview, in the 30 minutes that I have allotted, we'll cover the past legislative session. That was the 67th legislative assembly that gathered. And they left at the end of April. I did show up briefly to do some corrective work here, just a little bit ago. But for all intensive purposes, the session is wrapped up and things are going or have either gone into effect or they continue to go into effect, bills that pass, did pass. I'm going to touch also on House Bill 1158 that was the overarching tax relief package that lawmakers really grappled with for quite a bit of the quite, quite extensive amount of time during the session. So a lot of conversations surrounding that. We'll touch on some tax incentives for ag businesses. And that really has two different types of benefit. It helps incentivize business, but it also hopefully opens up some new, new opportunities for ag producers in the state as well. And we'll talk just ever so briefly on the motor fuel refund and a few do's and don'ts on that to keep in mind. But with that, talking about the legislative recap. And again, these are these are some highlights, if you will, related to our area of responsibility. And I should add that we are an administrator of tax law in the state. Our job is to administer and force statute and do the collection work on behalf of the citizens. And then we are the primary collection mechanism for the state of North Dakota, not exclusively, but approximately 90% of North Dakota revenue that is needed to operate or we produce about I shouldn't say produce, but we collect about 90% of of what is used to sustain the budget from biennium to biennium. So quite a lot of ground for us to cover as was mentioned. But on the sales and use tax side, there were two, two areas that I think are worth talking about. One was a renewable reads renewable feedstock refinery area. And then the other was sustainable aviation fuel facility refining renewable feedstock. And they were they were very similar in nature. But there were just some subtle differences to the two. And I'll explain those on the next slide here. House bill 1430 was the first that was used to provide an exemption and incentive for the construction of a renewable feedstock refinery. It could also involve an expansion of an existing facility and an upgrade, an environmental upgrade again to an existing facility. So fairly broad in nature, but also very specific in terms of who might be able to which entities might be able to take advantage of the exemption. And one that does come to mind would be the marathon refinery out in Dickinson. They would qualify both having having the capacity, the name plate capacity to fall within statute is being eligible. And also the type of type of work that they're going to do in product that they'll be producing going forward as they switch over to biodiesel. That was an important bill for producers. And as mentioned, it could certainly incentivize different types of ag practices and production practices in the state from types of crops raised, etc. And then the other so that we're talking about that as renewable feedstock refinery then another very similar, frankly, piece of legislation that passed in a different bill. It was a part of Senate Bill 2006. And that was also a sales and use tax exemption for materials used to construct, expand or upgrade, again, a facility that refines renewable feedstock. And these can amount to quite a bit in terms of savings, but it helps to incentivize industry. That's how lawmakers looked at it. And again, as mentioned, we just during the legislative process itself as, as a point of reference, we're not, we're not creating bill drafts. We're not proposing legislation as a rule, unless it's more of a housekeeping type mechanism. But we serve as a resource for lawmakers when they're entertaining these types of bills, considering them for passage work. We're right at the right in the thick of it. We're producing fiscal notes, estimates on what it might mean financially for the state. And if it's a reduction in revenue, we provide those types of projections so lawmakers know what's the cost. But that's that's one of our primary roles. And then the other is to make sure that it's worded correctly that we can administer it effectively. And that can be a bit challenging. But it's something that our legal team works on virtually nonstop from the beginning to end of session. But those two, both renewable feedstock, refinery type bills, one was related to the biodiesel type products. And the other was for sustainable aviation fuel. So some differences, caveats in the two, but really the same same same approach and same intent. Again, in terms of the legislative changes, I had mentioned the income tax relief package. And not as a part of that was the automation reenactment and changes. And really what that bill did was making it more agricultural, more agriculture friendly, if you will. It wasn't specific to agriculture, but they did include that language to talk about ag processing, ag manufacturing. And again, that has a ripple effect to the individual taxpayer in terms of more efficient plants in the state can certainly have an impact on agricultural practices. And and we see that with when you think of the Richardson ethanol plant and the amount of corn that's grown in that part of the world now versus how much was grown, you know, going back 20, 25 years ago, it wasn't exactly known as corn country. So that combined with as producers, no improved genetics, drought resistant varieties, things of that nature really, really reshape the ag ag landscape in the state. The automation credit, it's more, again, industry oriented. But that provided in an income tax credit that was tied to the cost of equipment purchase to to automate manufacturing processes of plants in the state. And that again includes ag or animal agriculture processing as well. And then the automation credit changes just a few of the caveats to that include a tax credit increase that went from 15 to 20% for qualifying equipment. So a little, a little more lucrative from that standpoint increased the maximum tax credits to an aggregate $3 million per year. If claims or requests for those credits exceed $3 million, we prorate those accordingly. And then 500,000 in credits is reserved for first time climates. So one thing that I found interesting when we're talking about automation credits, that type of thing, when we talk about value added agriculture in the state, it's easy to think about the larger plants, the crushing plants, the any type of large commercial scale value added in the state. But ag also continues to change as well in terms of who's eligible and who's taking advantage of these types of programs. And even on a smaller scale, large from a farm size standpoint, we do continue to see more and more activity with producers looking at ways to not just drop it at the elevator, but to enhance the value and sell it from a retail sell it on the retail level. So these types of things will become more more a part of the conversation, I think going forward, just for farming units in the state themselves and not and it's not even though often tied to large commercial scale operators, not necessarily the case. Hospital 1158, that was the that was the tax bill I was talking about the large tax relief package. I think we ran several hundred different scenarios in terms of combinations of weighted relief in the property tax area, the income tax area and several others. And lawmakers were just trying to find a formula that kept everyone reasonably happy so they could get the votes necessary to pass some type of legislation, which they did. And 1158 was a landmark type bill. It was the largest, for example, income tax relief package in state history, quite substantial in that in that respect. And then the balance of the bill, still a considerable amount, about 40 percent, was related to property tax relief through the Homestead tax credit was one mechanism as a part of that. And then then the primary residence credit was another component in that. And when you're thinking of farming, you might think, well, Homestead credit, that's for someone who lives in town, the primary residence credit would be the same. But as we know, quite a number of farmers, they don't always live on the farm itself, you know, on the farming unit. They might live in town. And then they hop in the truck in the morning, and they drive out to the farmstead, the shop that they happen to live in town. So these are still incentives that quite a number can take advantage of. And then those who do live on the farm, and I'll touch on this in a little bit, there is the farmstead exemption as well. So they're not under, they don't have a tax obligation, if that farmstead is a part of the farming unit. But House Bill 1158, it was quite a wrestling match with lawmakers in terms of what the final formula would look like. Just touching on this real quickly, in terms of the tax brackets, North Dakota, even prior to this had very low income tax levels. But what House Bill 1158 really did was eliminate the first bracket in terms of having any type of tax rate attached to it. Prior to passage of 1158, the tax rate on the first bracket was 1.1%. And then overall, we had five tax brackets with the top bracket being 2.9%. Those five brackets were consolidated into three. Again, the first bracket at 0%. And then you can see, depending on the filing status, how the other rates would play out. But, you know, for for every income earner in the state, when I when we look at from the lower income earners to the upper income earners, they all travel through the brackets. Some only get some don't get beyond the first bracket, but they still saw relief. Some get to the second bracket, some get to the third, etc. So proportionately, the relief would follow depending on how far someone would get through the bracket system. But North Dakota did prior to passage of 1158, we already had the lowest income tax rates in the state for states that have income tax. There are some states that don't. We were the lowest and now we just went down a little bit more. But it was one of the reasons law makers went this way is it was broad based relief. Not everyone owns a home. Six out of 10 North accountants do, but almost four out of 10 don't. So the income tax mechanism was a way to reach those individuals, the renters as well. The homestead credit I touched on the two types real quickly that that was expanded. Income was up to 42,000 prior to 1158 in terms of the threshold that moved to 70,000. It can't exceed that, but it did open the open things up for a number of new applicants. The 65 years and older that was the same. And then the permanent or having a permanent or total disability that remained the same. That was an existing statute. It was really about the threshold being raised and simplifying the formula a little bit. But again, for ag producers that aren't living on the farm, but actively farming, they just happen to live in town. They can take advantage of this as well. And then the primary residence credit. That's a straight $500 up to $500 tax credit that is applied to a property tax statement. Again, this would be for those individuals, as mentioned, farming, but not living on the farm, living in town. And again, there are a fair number of individuals like that. And it seems to, I don't know if it's a growing trend, but it's an interesting component when you think of our farmers and our crop farmers, our livestock producers, they're not necessarily out on the farm, out on the ranch anymore. The tax incentives for business, just real quickly, this is a slide we use quite a bit. Again, we've got very low income tax rates, zero to 2.5%. The corporate income tax rates as well, very attractive at 1.41 to 4.31. Our past through entities, partnerships, S Corps, they don't pay income tax that goes down to the individual level. Of course, North Dakota exempts all personal property from taxation. So no taxes on things like office equipment, inventory, accounts receivable. Some states do go that route. And it's, I think it creates a lot of paperwork. So I'm glad we don't, we don't have that in place. We have affordable workers comp unemployment, insurance tax rates. And just as, you know, moving along, just watching the time here, this is how North Dakota ranks from an overall taxing standpoint. And our collective tax rate when you look at sales and use tax, income tax, excise tax on a per capita basis. When you look at it that way and what's what's the overall rate, it's 8.8% is our effective rate. So really, when you're looking at this map, the darker shaded states are at the highest. They're the highest and lighter is better from a taxation standpoint. So North Dakota is very competitive. And here is our ranking overall. And this is interesting when you look at a state where we rank seventh and it will ebb and flow a little bit, but we're consistently in the top 10 for lowest rates in a good way. And you think of a state like South Dakota at 8.4% they don't have income tax. So there are no income tax state, but really not a lot of change in terms of our difference between North Dakota and South Dakota. The impression might be that it would be significantly more. But I thought I think that's always an interesting comparison to point out. And it and again, it ties back to the different taxing mechanisms. If you don't have income tax, you're probably going to have higher sales tax, higher excise tax taxes in other areas. So overall we're amongst the best Alaska really stands out, but very small population and a high and Wyoming follow suit sparsely populated, large geographic area and oil and gas reserves. Our exemptions are they include the 10 things listed from commercial fertilizer to tank cleaners, foam marker and additives, you know, during the chemical application process, whether it's herbicide, fungicide, insecticide, feeds, seed, etc. So those are all tax exempt in the state of North Dakota. And lawmakers are always talking about other things that they might be able to exempt. And typically, those proposals come from our rural lawmakers, and they're working on behalf of their constituents, especially when they're predominantly in an ag producing county. And that's their primary business sector, which, you know, for all intensive purposes, it is in just about every county in North Dakota. We have somewhere energy might trump ag receipts. But but overall lawmakers are looking out for our producers. And the sales tax rate in North Dakota, as I think everyone knows the state sales tax rate is 5% for most retail sales. New farm machinery is at 3% and then used farm machinery, that is not subject to sales tax. And one of the differentiating factors in terms of what is new versus what is used, if it's been taxed once, and then resold, it goes into the use category as a rule. Or if it's it comes in from out of state and that prior state had taxed it and then it makes its way across our border, that is also exempt. And that rate is three. Well, again, that rate that would be 0% on the use side. And for new, it's at 3%. Just on a side note, something we constantly look at in terms of providing more clarity to both producers and our ag businesses alike in terms of how those tax rates work. So we're always open to suggestions in that area. And then sales tax incentives also include those for ag commodity processing plants. I touched on that earlier on the renewable refinery side of the equation. North Dakota does have incentives for sales and use tax on construction materials, having those as an exempt area. And that's beneficial for driving new industry in the state. More sales tax incentives related to this would be a tax credit, an income tax credit, an investment credit for processing facilities, a little different way of going about it. But in general, the same approach, taxpayers are allowed an income tax credit in the state if they invest in a qualified ag processing or ag commodity, I should say processing facility as certified by the North Dakota Department of Commerce. That's a part of their division, a function of the division of economic development and finance for them, and constantly looking for ways to help, help incentivize new development. And that is the credit itself is equal to 30% of the investment. There is a limit up to $50,000 in credits for any year. And unused credits they can carry forward for up to 10 years. But there is a maximum overall in this particular area for taxpayers no more than $250,000 for credits for all the tax years combined. And then also there is another incentive that is a one one for fertilizer chemical processing facilities in the state. And as it states that is might or it can be granted may be granted for purchasing personal property, again tied to construction of a chemical or fertilizer processing facility. And quite quite a bit of conversation related to that, even this past special session, in terms of the fertilizer processing facility. So there is that tax incentive that is out there. And again, that this doesn't tie back directly to the individual producer. But from a cost standpoint, if we can, we can expand and create more access as a state for products like fertilizer, really good for our for our ag community. And then just kind of move past this, I see I'm getting down to the last few minutes. But this is a similar incentive again, tax exemption on machinery and equipment used to support manufacturing and agricultural processing. In particular, there are also property tax exempt exemptions. And I touched on this a little bit earlier. You know, I had mentioned the brought up the example of of a producer living in town eligible potentially for the homestead tax credit, depending on their income level, also eligible for the primary residence credit. But the second bullet point in this is what I had already referred to that something that is a part of a farm unit. And as a rule, it has to be not only part of the farming unit, but ten or more contiguous acres. There are some some criteria, as you might expect as a part of that, but that farmstead can be exempt. And ag processors, they can also be granted a partial or even a full exemption that is up to five additional years to help them get off the ground as well. So a couple of property tax incentives that are out there for both producers and processors alike. And then this was this was also something that was a part of this past legislative session. At least a part of this, you have the workforce recruitment credit that's out there. That is someone who contracts with the professional recruiter for a fee. They provide employment information on a website, paid signing bonuses, moving expenses. Essentially, how do we incentivize people to apply for jobs and come to North Dakota to work to help help ease our workforce shortage? We have some challenges in that respect. And then the internship employment credit as well. And that is for an internship program in North Dakota. And that can certainly tie back to agriculture. Talked a little bit about the motor fuel tax. The normal rate outside of agriculture for motor vehicle fuel tax, the state rate, is 23 cents a gallon. The special fuel tax rate is also 23 cents a gallon. But then when we get into dyed diesel fuel, biodiesel kerosene. But, you know, when you think of North Dakota agriculture, you're going to be thinking about diesel in particular. That's taxed at four cents. If a producer does pay 23 cents a gallon, if it's used, fuel used for agricultural purposes, they can apply for a refund. We handle quite a few of those. And one thing I had brought up kind of some do's and don'ts. One thing that is a don't is for producers is not putting the dyed fuel in their diesel pickup and running that up and down the highway. That isn't something that is considered agricultural use, even if they're running for parts. Once you're on the highway system, you want to make sure that you're using highway diesel and not dyed fuel. So the eligible pieces machinery, we've got tractors, swathers, combines, as you might expect, powering augers, etc. And again, also as mentioned, non-eligible as pickups, trucks, cars, the things that would be more more non-ag-related, even though an ATV, for example, could certainly be considered for ag use. And then just on the refund front, I'll close this out really quick, we did issue 550 refunds for those who didn't start with the four cent tax and paid the 23 instead and over 400 and you know, almost a half a million gallons of fuel tied to that. And then one final piece is we encourage our taxpayers out there, businesses, individuals alike, to utilize the North Dakota TAP, which is taxpayer assistance point, as we move into the digital future, if you will. We continue to work on this. It's effective 93 94% of individual income tax filers file electronically, businesses are in that 90 plus percent range as well. And this is one of the portals that we offer for businesses in particular in terms of filing electronically. And then finally, don't be afraid to tell us how we did what you'd like to hear more about changes for future presentations or any questions you might have. There's my contact information. And it'd be more than happy to visit. Well, thank you, Brian. I see you have one question in the chat here. Why does North Dakota still have personal property tax on manufactured homes, personal property tax and manufactured homes? I would actually do it. I'd have to. That's one of those things where I'd have to dig back into statute and and, you know, what was the intent by lawmakers when that legislation was enacted to begin with? But I'd be more than happy to follow up on that. I off the top, I don't know the history behind it, but it's an interesting question. Whoever asked that question, you can try contact contact him directly and see if he can find that find that out. So yeah, yeah, please do. And the number I list and I share this publicly, I've been I've been told I'm crazy for doing this, but I think it's really important to be as accessible as possible. That 701 471 number, that's my personal cell phone. Feel free to call me. It's the easiest way to get a hold of me. So whoever posed the question, look forward to visiting with you and and I'll do some follow up and get some answers. Good afternoon, everybody. Pleasure to be here today and I would ask if you've got any questions as we're going through the presentation, throw them in the chat and let's see if we can benefit everybody. I know a lot of you have been on presentations in the past, where I've talked that some of you may be new. So we always like to talk a little bit about what our department does here at Ag Country. These are the six areas we focus on. Not every farm needs all six. Some of them only need a couple. Some need all of them. So it's just a matter of trying to kind of create a holistic plan for the farms and address exactly what they need. Next one run. This is something we tell people and we see this come to fruition on a regular basis where the farms that don't plan that don't get out in front of things that don't do a good job tax planning or estate planning or retirement planning, their heirs or successors might have to compete with other producers that are. And for those folks that plan on an opportunity comes along and seems that they're in a position to more readily take advantage of that opportunity. So next one. So here's today's topics. We're going to talk about updates what we're seeing out there. We're going to talk about the importance of reviewing and I'll show you why when we get into it. I'm going to cover estate planning. I will get into transition and retirement planning and talk a little bit about some of the tax tools that we use and some of the things we we encourage our customers to consider. And then of course, I never I never get through a conversation presentation without talking about communication. It's it's a vital piece to this whole process. Okay, here's county land values that we're going to start. And what I'm going to do is tie this into what we're seeing. This chart we put together based on data that comes from our appraisal department. Every June, our appraisers appraise certain parts of our association. We call it a benchmark survey. So it's the same parcels year in and year out. Some of the parcels are two to three quarters. Some of them are five to six quarters. So it just depends on where we are. But as you can see, this is no surprise to anybody that's been in agriculture for any period of time. Just how much increase in value we've seen in land. And again, you're not going to see every county there in North Dakota because we don't we don't appraise in every single county for the benchmark survey. Next one round. And of course, you all know about machinery as well. If you're working with producers, we know what's going on.  We originally had it on our balance sheet for $125,000 and now the implement that will give us 150. And so that's those those are common stories. But clearly, machinery is a big part of this whole pricing issue. Next one run. So let's talk about some case study. I took my worst ones that I've seen over the last year and put them out here to show you what we're seeing. Now this is the next two slides or the next four slides. This is probably as bad as it gets. But it's still indicative of what we're seeing when it comes to buyouts. Now, when I talk about buyouts, what I'm talking about in estate planning documents like a will or a trust is when there's language in there, typically at the second passing of both spouses, where a successor can buy out siblings or buy assets from a trust with a with a pricing formula, pricing formula usually is traced back to the appraised value. So in this case, we have four children. In this case, they had a will with stipulations for a farming child to buy out the trust. I think this one was done in 2009. The parents own nine quarters, they gave two quarters in the trust of the will to the farming child. And then the remaining seven quarters would go equally, being bought out at 80% of the appraised value by the successor. Land in that area recently sold for $6,500 an acre, bringing a total value to about 9.3 million if we use that average. Parents had a nice machinery line. I think they use their machinery to tax plan. But anyway, the 20 to 20, two and a half million can also be purchased at two and a half or at 80 percent of value. And then the resident, which is everything that's not specifically listed in the will or trust one equally between the four children. Next one round. So what this equated to was machinery was about the purchase value went to about 5.824 million. Machine rebuy out was at about 2 million. The good thing here is is a successor participated in the sale proceeds. So to buy out the three siblings, when I ran this, these numbers and put it in front of the customer was about 4.3 million dollars. The total buyout equates to about 5.8 when you throw the land of the machinery together. Based on the numbers at the time we did this, the interest rate was six and a half. So this is a little aged. The purchase price, the payment would have been about 487 thousand dollars a year. Okay, I remember this will 14 years old. Second case study deals with an entity that I worked with. And thereby sell agreement was, I believe, from the 90s. They had about everything you could think of in this corporation.  This corporation was put together, I think by their dad in the late 70s. So again, we continue to see this. And of course, the houses were in there as well. Next one. So the total value for the Corp estimated to be about 18 million 483. It had some debt. So net equity was about 17607. Each owner's equity 5.8 69 million dollars. The buy sell agreement said if the equity exceeds 1 million for anyone owner, it's sold over 30 years using AFR under the arrangement to buy it would have been 360,000 308. So the question we're asking our customers when we do this kind of analysis, is this feasible? Is this something that your farm can support? And of course, everyone's going to say no. And again, we've corrected these, we had action steps, changed the buy sell agreements, we changed the will for the case with the nine quarters. So but the point we're going to make is as you see me go through the presentation today is review your documents, especially if they're older than five years. And especially if there's buyout provisions in those documents. So what are we doing? How do we approach this? The first thing we do is we kind of we run that balance sheet through the will or trust. We just pretend that second spouses dies could typically on first passing, not always, but typically all assets would go to the survivor. So we don't have any buyout issues. But then we run it through we apply their formulas, and the numbers in almost all cases really surprise the customers, they just haven't thought about it, and really applied their numbers to it. So that's the first step we do then for entities, what we want our customers to do is sit down each year and agree on a value. And if I had you all in a room right now I'd ask you to raise your hand and have you tell me how many customers sit down with their their their fellow business partners and do that each year. It's a very small number. But for those that do, it just helps them understand if they should be adjusting their buy sell agreement. The obvious one is to reduce the number of acres and or the number of assets a successor must buy. That's a lot of what people will do. In case I shared it with you with the nine quarters, some farming sun got five now. And so the other four quarters would have to be bought out which still going to be a sizable amount where they live. Increase discounts or increase to buy out duration. It's one thing to talk about. Certainly we can look at having them buy some life insurance. Some farms will buy life insurance on usually it's a second to die. And at second passing the life insurance proceeds would go to their non farming areas. The bulk of the farm related assets would go to the successor. We've done this a number of times will sell land to this successor now. Start to buy out when that successor's in their thirties or forties and get it started so they're not faced with a potential buyout when they're in their late fifties or early sixties. Of course the issue here is this is going to be taxable. I know it's not a step up of course on a contract. But it's one way to kind of chip away at high buyouts. One thing I've done that this one surprises me as to how many people like it. But at the second passing of both parents we would keep the land and the trust. Maybe not all but maybe the home quarter or other key pieces would go to the successor immediately. But then the successor rents the land out of the trust with the rental proceeds going to the non-farming children. And then after a period of time typically it's been between five to ten years of time that trust terminates and the land then goes to the farming successor. This doesn't always work especially where there's areas where the rents are a little low so it's just one idea that we'll talk to our customers about. So if we've got a balance sheet where we've got a lot of non-farm assets maybe we've got a big retirement account, a home in Arizona, a lake home. We might suggest that we look at leaving all or most of the farm related assets to the successor and all of the non-farm related assets to the non-farming children. The risk here is the nursing home. You know if all of those liquid assets are in the name of the parents and one of them ends up in a nursing home those investments, cash with other securities are going to probably be used to pay for nursing homes. So we have to have the conversation about that level of risk. One thing we can do is we can put land in an entity like a limited liability, limited partnership. The two ownership classes in the LL-L-L-P are the general class which is a controlling class and then the limited class which is a non-controlling class. And then we leave at the second passing of mom and dad we would leave the general controlling interests to the farming children. And typically when we structure these arrangements the general class is only about 2% of the total ownership. So it's not so much the percentage in this case but it's the type of ownership that we're leaving to the farming sibling. And then the limited interests which are the non- controlling interests could go out equally to the rest of the kids. A lot of folks like these land entities because we can build buy-sell agreements that restrict ownership to just the immediate family and their heirs. The farmer stays in control. They like that because if they need to buy land and use partnership land for collateral they don't need the permission of their non-farming siblings. Again these are all very case specific folks. Not everybody needs the same thing but these are some of the tools we're using. Next one Ron. All right here's some recommendations we could ask this a lot. How often should I look at my will? Well it depends. If you've got a successor we definitely need to look at it at least every three to five years. Especially if there's buyout formulas in that will or trust. If we don't have a successor there'll be five to seven. Sometimes the laws change and if people aren't routinely bringing their documents in for a review there may be something in the body of their will or trust that we can adjust or make a change to. So it just makes things flow better. Maybe they've acquired a property outside of their state. I had this happen this morning. They had a will-based estate plan. They just purchased Arizona property. I had to tell them you know at the second passing you're going to have a probate in Arizona. So we had to make an adjustment in their plan. Buy-sell agreements for entities. We like to look at those every three to five. Again a lot of it has to do with the formula for any type of buyout. But what if you're adding new owners? We should probably have the new owners sign that document. I mean they're bound by the terms of the buy-sell agreement when they become owners. But I always like to ensure that they've had an opportunity to look at it and to prove they've had that opportunity. We want them to sign that buy-sell agreement. And then on the larger estates, we need to be planning today for the tax cuts and job act and sunset. You know the possibility that that exemption is going to go down is all over the board. You know I was at a seminar in last May in the CPA that spoke there said that in order for that law to not sunset, we need a Republican House, a Republican Senate, and a Republican President. And the circle he runs in suggests that the probability of that happening is about 12.2%. So I don't know where he got his numbers, but that would suggest that the sunset has a higher probability of some happening. One thing, we all know farmers are notorious for last minute. I mean, how many of you get your information from them to do tax funding on time? You know, they're busy people, a lot of them, they don't think about this stuff and they forget. The thing we're worried about is the last sentence there. If everybody waits until 2025 or worse, the latter half of 2025 and it looks like it's going to sunset, are there going to be enough people to do the work to get any kind of transfers or sales that we need done? We don't think so. And so that's why we're getting out in front of it with our customers now, especially with these larger estates to start suggesting we start taking some action like perhaps selling assets and gifting assets, getting into some other provisions of the state plan that helps control out of state tax. Next one, Ron. All right. What are we talking about with TCJA? What are we telling our customers? First off, they need to know about it. Okay. And Ron did a good job going over what is going to change in addition to, you know, the the estate tax. You know, it impacts the TCJA expiring impacts more than the federal estate tax, but the exemption next year when we go into and I'm coming up to a slide is going to be higher, but everything gets basically gets cut in half. If this thing does sunset. One thing that's really key when we're doing work for our customers is we've got to use real time values, balance sheets from loan officers and from producers almost always undervalued the land and from a credit and lending standpoint, that's that's healthy. I mean, you can't loan based on 100% of market value. You've got a loan on a lower value because if land values go down, the loan is still pretty solid. So estate planning needs to be done using market values. One of the things we're talking to a lot of customers about if if they're open and inclined to gift is to consider gifting now use up some of that unified credit, especially in states where there's a state estate tax like Minnesota use of land entities. This is one area that we've really ramped up with the larger estates using the triple LPs to own their farmland. Generally, what we'll suggest is let's take a look and have that entity value. Let's see what that thing's worth, not only in terms of its asset value, but take it to a business appraiser and have them appraise it for purposes of the minority marketability discounts. Now we all know that those M&M discounts have been challenged by the IRS and several other lawmakers in the past and they would like to repeal them. But the appraisers I work with seem to think that, you know, the case law and the historical perspective will continue to support the M&M discounts. But for the larger estates, that's one area where we're looking, I should tell you a lot of the appraisals we've had done over the last year have been in the range between 35 and 40 percent discounts. And they're supported by good material and good data, good research. And the appraisers I talked to as well, I asked them, what are you seeing, you know, are you being hauled into court to justify your appraisal? Most of what I hear from them is for land entities, very little, if any, where the IRS has a lot of angst, or triple LPs that own a lot of investment assets, stocks and bonds and those types of things. So let's, you know, these are some of the tools, we'll see where this goes, hopefully, and we still have this tool in the future. Next one. The message we have for our customers is review your documents soon, especially if you've got a buyout formula for your siblings, or if the entity has a buyout, almost all buysell agreements for an entity have buyout provisions. And don't wait. And like I said, we've been telling our customers, if you wait, you may not get your work done. Come in and see us. Let's explore the options. Let's see how you feel about this risk and see what action steps might fit into their plan. Next one, Ron. So here's where this tax cuts and job back to going. And I think some of you may already know this, but here's our 2023 numbers, annual gift exclusion, our lifetime exclusion, and that we have for a married couple through portability. 2024, the annual exclusion is going up to 18,000 per person. The lifetime will go up to 13,610 for 27 to 20 for a married couple. This is where inflation is helping us. It's making a difference on the estate tax exemption. So let's see where this goes in 2025. We don't know yet. Again, if we sunset, you'll see 2026, we're back where we started, 11 of 18, and then adjusted upward for inflation. And again, it's anybody's guess where this will go, if this law does in fact sunset. Next one, Ron. Quick word on state to state taxes. I put this slide in here because last time I talked, I got a couple calls from people who live in Minnesota, but do North Dakota taxes. So I thought I'd throw this in North Dakota, South Dakota, and we work in Wisconsin as well. No estate tax. Minnesota does have their decoupled and they do have a state estate tax next run. And here's their numbers. This is an extra estate tax on top of anything that might come from the federal government. The standard exemption in Minnesota is three million. If they have a qualified air farming their land or qualified small, small business, you can add an additional two million to that for a five million dollar exemption per person. But Minnesota does not have portability like North Dakota does. You can't port and unused spouses exemption to the survivor. So we have to be ensuring that there's a disclaimer or bypass trust in there. Next one, Ron. So with the estate plan, one of the first things, you know, we need to know and we always know this right away. But, you know, if we're going to transfer a farmer ranch through the estate plan to a successor or just transfer assets to no successor, those documents should look different. And why? Because equally devised documents, estate wills and trust, no longer work. And we're going to get into a discussion here in a little bit about the degree of legislation we're seeing and the, and the fights. I mean, that's just really what it is when things go equal. And people just don't get along and agree. Next one, Ron. So during during your life, again, I always remind people never forget about durable powers of attorney. If you've got an older POA that's saved seven, eight, 10 years older, you might want to have that looked at the newer powers of attorney are including provisions for digital assets. And our concern is if you've got somebody's cell phone that needs to be changed, and they're laying in a nursing home and you walk into Verizon with no POA, will they let you make that change or do something with that phone? We don't know, but we we think you stand a better chance with a POA that contains digital language. In both the health care and the power of attorney, try to avoid dual successor. Generally speaking, each spouse is a successor for each other. And then we appoint children after that, seeing problems with more so the banks. If there's two successors in their joint, they need to be there together in some banks, not all, but in some. And I've had I have a couple of farmers whose spouses are doctors. And I asked them, separate, of course, what do you think about health care directive successors and told them, you know, should it be two or one and both like immediately said never put two on there. Because if they disagree, then the doctor and the nurse have to get involved and try to coach them through it and get one to them and get on the same side. So quick talk, quick note on nursing. Let's go back to nursing home real quick, Ron. What do we look at doing if they don't have long term care insurance? The older policies are really good, but they're getting extremely expensive. We're seeing letters being sent to customers with an offer to buy out the insured for the amount of money they put in in premiums. Those are the lucrative ones. The newer ones are not good. The newer policies just are very watered down. People can self pay. We always design, we run cash flow models to see if their cash rent or social security, other assets will allow them to self pay. But more so with land, people want that protected. The vast majority of people do not want their family to have to sell their land to pay for a nursing home. So we started looking at life estates and irrevocable trusts and remind them that those assets have to be out of their name for at least five years before they're considered uncountable or not something that has to be spent out. So okay, now we can move ahead. Alright, let's talk about transition and retirement planning. And again, I remind everybody in every seminar I do, time is really your friend. I mean, there's so many things that can change financially with health. We think, you know, transition plan five to 10 years, it needs to address everything. Everything at that farm needs to be touched on and talked about. Because shifting power is what I see is way more difficult than shifting assets and transitioning assets. It's easy to start moving machinery. And let your son or daughter buy the new piece. But when you start shifting power and control and management of that farm, that can be a daunting task for some individuals, it takes time for them to get used to that. Some are better at it than others. But we always want you to take time for people that don't have successors that are looking at retirement planning, we like to see three to five years. Do we always get that? No. I mean, we'll still help them and get the work done. But the pressure that we put on them to make decisions, especially as it's related to tax is a little sometimes a little overwhelming.  You know, two to three years out versus having to have up all that done in the year they're going to be done. Next one, Ron. All right, transition tools. Let's talk about machinery bins and buildings, of course, the infrastructure. Obviously, we can sell these assets, but we all know what kind of a tax burden that is. I don't think there's a week that goes by where I have a customer that doesn't say what are the taxes if I sell my son, my bin site, or if they start taking on, you know, the feed lot. Leasing. Now there's two kinds of leasing I'm going to