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Economic and Federal Tax Factors Affecting the Choice of a Legal Farm Business Organization

Author

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  • Boehlje, Michael
  • Krause, Kenneth

Abstract

Recently reduced corporate income tax rates and inflation-induced higher tax rates for individuals provide incentives for farmers with taxable incomes above $25,000 to incorporate. Above that level, incorporated farms generally pay less in taxes than unincorporated farms. Compared with sole proprietorships and partnerships, corporations can often accomplish estate planning goals more easily through use of stock and debentures, can purchase certain employee fringe benefits at a lower after-tax cost, and can frequently reduce income taxes further by dividing the farm income among multiple entities (two or more corporations or individuals, each with different responsibilities).

Suggested Citation

  • Boehlje, Michael & Krause, Kenneth, 1981. "Economic and Federal Tax Factors Affecting the Choice of a Legal Farm Business Organization," Agricultural Economic Reports 307902, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerser:307902
    DOI: 10.22004/ag.econ.307902
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    File URL: https://ageconsearch.umn.edu/record/307902/files/aer468.pdf
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    Cited by:

    1. Miller, Thomas A. & Stucker, Thomas A. & Smith, Matthew G. & Krause, Kenneth R. & Harrington, David H., 1985. "The Changing Financial Structure of the U.S. Farm Sector," Working Papers 113074, Colorado State University, Department of Agricultural and Resource Economics.
    2. Davenport, Charles & Boehlje, Michael D. & Martin, David B. H., 1982. "The Effects of Tax Policy on American Agriculture," Agricultural Economic Reports 307912, United States Department of Agriculture, Economic Research Service.
    3. Johnson, Sandra L., 1982. "The impact of the Economic Recovery Tax Act of 1981 on the intergenerational transfer of farm estates," ISU General Staff Papers 1982010108000017435, Iowa State University, Department of Economics.
    4. Day, Lee M., 1981. "Research And The Family Farm: Implications For Agricultural Economics Research," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279246, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Farm Management; Financial Economics;

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