Congress considering bill to exempt farms & ranches from estate tax

By Melissa Coon

© Copyright Agri-Pulse Communications, Inc.

Washington, June 7 – The National Cattlemen’s Beef Association (NCBA) and the Public Lands Council (PLC) are calling on Congress to protect family farms and ranches from being taxed out of business by supporting H.R. 5475, the Family Farm Estate Tax Relief Act of 2010. This will exempt family farms and ranches from the estate tax as long as the estate continues in farming or ranching.

According to the American Farm Bureau Federation, estate taxes are especially harmful to famers and ranchers because their businesses are capital-intensive with a high concentration of assets tied up in land, buildings and equipment. When estate taxes exceed cash or liquid assets, surviving family members may be forced to sell land, buildings, or equipment necessary to keep the business going.

“Allowing family farms and ranches to be taxed out of business will put our national food security and global competitiveness at serious risk,” said NCBA President Steve Foglesong.

On January 1, 2010 the estate tax temporarily expired. However, unless Congress takes action by the end of the year, the tax will return in 2011. In this case, anything above $1 million will be taxed at 55 percent.

“If Congress fails to act before the end of the year, it will be a death sentence to family-owned operations,” Foglesong continued. “The Thompson bill would help hardworking farmers and ranchers keep their land and operations intact for future generations.”

The death tax is considered one of the leading causes of the breakup of multi-generation family farms and ranches. Eliminating it would ensure that farmers and ranchers are able to keep their businesses in the family.

“Without specific agriculture relief, we’ll see family-owned ranches torn apart and converted into ‘ranchettes’ and subdivisions,” said PLC President Skye Krebs. “Instead, the Thompson bill would allow these lands to stay in production agriculture, supporting both healthy rural communities and the preservation of open space and wildlife habitat.”

The estate tax makes it difficult to keep farms within the family. However, H.R. 5475 would defer the estate tax for as long as the operation remains in agriculture. If the owner were to either stop farming or sell the property, a recapture tax would be imposed. The bill would also allow farmers and ranchers to qualify for a more generous tax deduction for land donated to a conservation easement.

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