Farm Income Tax Management and Reporting Manual

Abstract

The Tax Reform Act of 1986 has been "cussed" and discussed since becoming law on October 22, 1986. Some have praised it for providing tax simplification and a more equitable system of taxation. Others have described it as very complex, extremely complicated, and a law that has placed additional accounting requirements on thousands of taxpayers and their practitioners. There is some truth in all of these claims and growing evidence to support the latter. The year of talking, planning, and preparation is nearly over. The year of application is about to begin. Recognition and complete understanding of all the tax changes that affect individuals and small businesses will not be achieved in a day or in this first application year. Our objective is to review, discuss, and emphasize the changes that will affect most New York farm taxpayers. These topics include capitalization of preproductive period expenses 1 new MACRS depreciation, a revised alternative minimum tax system, and the numerous federal and state tax changes that affect individual taxpayers. New York State passed two tax laws in 1987: The Tax Reform and Reduction Act of 1987 and the Business Tax Reform and Rate Reduction Act of 1987. Each will affect the tax returns and tax bills of farmers.