America’s Land Auctioneer
Captivate and celebrate the dynamics of rural America, American Agriculture and inspire and teach others how to live a bold and abundant life in rural America. Background: The intrigue, endless opportunities, and romance of rural life in America have never been more on the minds of Americans. The recent pandemic and civil unrest have Americans of all ages earning for a more peaceful, less hectic life. Even billionaire Bill Gates is now the largest crop landowner in America. As many Americans look for peaceful refuge in the rolling hills and wheat fields they are faced with a richness of opportunities. But where do you begin to look? This show will highlight and feature endless opportunities in every state. What is it that is so unique about rural America, the land and what it produces? How can I live that life? The American Land Auctioneer will tell stories and weave into those stories a place for you to dream, live and enjoy the abundance of all that rural America has to offer.
America’s Land Auctioneer
Tax Planning Strategies for Landowners
Navigating the complex world of taxes isn't just for accountants—it's essential knowledge for every landowner, farmer, and small business operator wanting to protect their hard-earned assets. In this illuminating conversation, host Steve Link welcomes tax expert Kent Busick from Busick Associates, who breaks down the recently passed "Big Beautiful Bill" and what it means for your bottom line.
Kent brings a unique perspective to tax planning, having grown up on a North Dakota grain farm before obtaining his master's in business taxation from the Carlson School of Management. This blend of practical agricultural knowledge and technical expertise allows him to translate complex tax provisions into strategies that real farmers and landowners can implement immediately.
The discussion reveals several game-changing opportunities hiding in the tax code. The restoration of 100% bonus depreciation, the increase in Qualified Business Income exclusion from 20% to 23%, and the often-overlooked Section 180 soil study deductions all represent substantial tax savings. As Kent explains, "If you're making a million dollars in your operation... that's a $30,000 deduction for you that just comes off of your adjusted gross income."
Perhaps most valuable is Kent's insight into permanent versus temporary tax deductions. While depreciation on equipment must eventually be recaptured, Section 180 deductions for soil nutrients create permanent tax benefits that never need to be recaptured when passing land to the next generation. Combined with the $15 million estate tax exclusion ($30 million for married couples) and unchanged stepped-up basis rules, farmers now have unprecedented tools for transitioning operations without crippling tax consequences.
Whether you're contemplating land improvements, equipment purchases, or retirement planning through Cash Balance Pension Plans, this episode delivers actionable wisdom that could save you thousands in taxes while building generational wealth. Listen now to discover how the right tax strategy can transform your financial future.
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Welcome to America's Land Auctioneer. I'm your host, steve Link, broker for Piper's Auction and Realty, and I'm excited for another, another jam-packed episode with lots of information. We gear this program towards landowners, small businesses, the upper Midwest, and we have a special guest with us, kent Busick from Busick Associates, and we're going to talk a lot about taxes, financial planning and things like that. But before we get into all of that, I want to thank our sponsors. It's Pfeiffer's Pfeiffer's Auction and Realty and Pfeiffer's Land Management.
Speaker 1:If you're thinking about selling land, buying land, selling equipment or need land management, go to pfeifferscom, look up our associates. You can call any one of them for a free consultation. Now, if you hear something on this show didn't have a chance, didn't have a pen, you're driving down the road and weren't able to write it down go to Piferscom and click on the blog tab and you can go and search these episodes and listen, or you can go to your Spotify or Apple podcast and search us and listen to any of the past episodes. All right, so, as I teed it up, we got Kent Busick from Busick Associates. Kent, how are you doing this morning?
Speaker 2:Good Steve, how are you?
Speaker 1:Great, great, great. Well, as we were talking before, so you're a morning person, so you guys get up and get after it every morning and solve the world problems even before most people are having breakfast.
Speaker 2:Yeah, we're like the Army we get a lot done before 8 o'clock. So we've got a group that gets together and solves a lot of problems, and a pretty diverse group. And you know, Steve, you've got to come join us someday.
Speaker 1:I will, I will. That'll be a lot of fun. All right, kent, let's introduce you. Where did you grow up? Where are you from?
Speaker 2:I grew up on a small grain farm western north dakota, in minot, and we had a thing called summer follow. Back in the day so grew up with the old farm program that we basically had 30 of a summer follow we uh 40 wheat and some barley and oats and and um tried to make a living out in minot so I I tell that story quite a bit about, you know, traveling out to western North Dakota, growing up in eastern or in western Minnesota and traveling out to western North Dakota and seeing Summerfowl and just being confused.
Speaker 1:And it took my college classes to figure out what Summerfowl was and why they did it. So you grew up on a farm and you were really close to Minot, right?
Speaker 2:I mean, your farm was was right next to the city, then the farm itself was five, six miles from town, and then we had some land a little bit farther out. So, um, you know, I grew up on a, on a, on a farm. Um, my brothers and sisters, they had uh cattle and chickens. We just uh had the small grains.
Speaker 1:Sure sure. So where did you go to school then after high school?
Speaker 2:Did my undergrad work at NDSU, and this was back in the 80s in something called Buffalo Commons, when the Midwest was there, was going to be nothing there and they told everyone to move. So I moved and spent some time in El Paso, Texas, three years in Denver, five years in Minneapolis where I went to the Carlson School of Management and got a master's in business taxation, and then been back in Fargo about 30 years.
Speaker 1:All right. Well, 30 years, okay, and married and have a family.
Speaker 2:Married three kids starting to move all over the country and two done with college. Third one going to college.
Speaker 1:So you're going to be an empty nester. Going to be an empty nester and take advantage of that. So I've got some travel planned up. That's awesome. So yeah, so my, uh, my oldest is is graduating, so I'm just starting that stage of life and and, uh, your, your youngest, is graduating, so that's uh, or just graduated, so that's, that's exciting um, so a little backstory with steve.
Speaker 2:I mean going back 15, 18 years ago. I mean you were new to the game and you had this idea that you wanted to do how did you want to auction my dad's land? You had come up with this idea that I said, oh, that's too crazy, you can't do that.
Speaker 1:And that's kind of what you do all the time now well, I think at that time we were toying around with the eBay of auctions, right. So, um, and, and, because ebay was brand new and you're really, you're selling stuff online and and, and you know, nobody, nobody's there, um, and in person, and we were starting to develop that, we were programming that and fast forward. Um, you know, it was it, it was a grind, and then, lo and behold, covid happened and everybody got on board. I mean, it was popular before that, but once COVID hit, everybody got on board and it was incredible how the Internet has changed the auction industry.
Speaker 2:But I recall I was like one of the first persons you talked to me about because I was looking to transition the farmland after my parents passed and you know I was working with the renter and we couldn't come together on a price.
Speaker 1:And then Steve comes in with this idea and it's like well, here we're going to put it out there and you know, and I've always enjoyed it because I can't I can call him and and ask him questions off the cuff, and Kent calls me and we talk about farmland values and all kinds of things we get into. And you know, kent's got a unique perspective too because he's got a farm background and that farm industry and in the business and you've gotten into a little bit of developing and commercial property and all of that. So you really we're, we're we're in sync and and and I really trust your opinion on the tax side of of things and that's that's. That's what we're going to, we're going to talk about today.
Speaker 2:Well, and then you look at the people that you work with. You know farmers it's not like in the seventies and eighties. You know it's a business today and you really got to manage the farm and you know the bad farmers farmers, they don't. Or the bad business people they don't stay in business, whether it's farming, whether it's the trades, whether it's a professional business. So I mean the farmers need to manage the business and as the client base gets older, especially out on the farm, I mean they're real estate professionals now, right, I mean they may not farm as much and they're just transitioning to um, um, renting the, the land and trying to maximize the returns on that.
Speaker 2:And you stop and think about it. You know no different than you and I with a commercial building or apartment building. You know we need to maintain that building, we need to have good renters, we need to put resources back into those properties. It's no different than the farmer renting his land. I mean he needs to have a good tenant on that land that's taking care of the soil. I mean you don't want somebody, you know. You just don't want a bad farmer out there. You just got to protect your asset and maximize return. So again. You know, whether you're doing real estate, whether you're manufacturing something, whether you're a farmer, you know everything applies to everybody.
Speaker 1:I think that's a great point. You know everything applies to everybody. I think that's a great point. You know we talk a lot about. You know, if you are, maybe you're really good at planting and harvesting crops, but if you don't get the business side done, it's going to be a tough road ahead and you may not have to know everything, but you need to know who to call. And so if somebody is um, is is is new to the show and or new to new to this, um, this, this realm, and and taxes, and they and they come to you and say Kent, um, I don't know what I'm doing. Where do you start? Do you want their last three years of taxes? Do you want their balance sheet? Do you want as much as you can? Do you sit down and interview them and talk to them, or what's your process?
Speaker 2:One of the things that I've been able to do is, you know I'm on about a lot and you know I talk about how we get together. You know, most days and people we have this coffee group to get together to solve the world's problems. But again we're talking business, we're talking deals, we're talking about what's going on and a lot of times I'll get referrals or an introduction to somebody and I have a background. It may not be exactly what they're doing, but again one person has an operation. The person down the road is going to have a very similar operation. So if something applies you know I'm not a rocket scientist here and coming up with creative things for the individual, but again it's more so from a group standpoint.
Speaker 2:So if somebody is going through and taking advantage of a program or a tax credit or a deduction that's out there, you know it probably applies for the whole gamut. So that's what we do and just kind of get a feel for where you're at. And you know and you see it in your world too that you know you go out and deal with farmers I mean, they're not that different and business people, they're not different. They're, you know, just trying to make a living and, you know, provide with people that will work for them and their families.
Speaker 1:Yeah, that's all great points. How many people are working for you?
Speaker 2:Well, I have eight employees full-time and then during tax season we ramp up and add a few seasonal people so we get up to about a dozen. We have four CPAs on staff, so we're a full gamut with the firm. You know I focus on taxes and tax planning and it's a little bit beyond that. You know just business ideas and also from a networking standpoint. A lot of times people you know I need a new employee, I'm looking to sell my business, I'm looking to add something, and it's like you know I just say give Steve a call or give Kevin a call. And you know that's how this meeting came about, or this show came about. This morning I had somebody that wanted to value some property and kind of wanted to very preliminary. I said, you know, talk to Steve.
Speaker 1:Yep, yep. So that's exactly how it happened. And it brings people behind the curtain. Kent calls me up, says can you help this guy out? Do you have any experience in this? And I'm like, yeah, absolutely yeah, we can help him out. And if I can't answer it, I know somebody that can answer it. And then, absolutely yeah, we can help them out. And if I can't answer it, I know I know somebody that can answer it. And and and. Then I'm like this is this is the right, right person to have on the show and and and explain all that. So Busek, olson and Associates, right, is that where you still go by, or you go by the tax man?
Speaker 2:Well, that's kind of our, our brand name out there, so kind of a couple of different operations. The, the tax man side, that's more of a just the in and out. We still see those people once a year and that's more of a compliance standpoint. But on the BUSY goals side, that's where we get in the nuts and bolts and you know, and we'll sit down with you and it's like hey, have you considered this? Have you considered that? Just throw some what ifs out there and some strategies for you. And you know, sometimes people take, take the information and run with it and decide to do that. And you know many cases and in some cases they don't. But I just like to give you options.
Speaker 1:Right. So the tax code is extensive, right, and they seem to try and change it periodically. Some things have been around forever, some things are changing the business. It's a big, beautiful bill. I'm sure has been kind of a bomb in the in the tax planning arena. At least it's maybe set some some, some timelines and timeframes. So how do you unpack all that? Or you, just, you learn as you go.
Speaker 2:Well it's. You know you're constantly getting inundated. It's no different on on your side that you're getting updates on farm sales, what's equipment selling for. You know what's going on in this industry. You know you have the same issues with the farm bill and how it impacts a lot of your clients. You know it's no different with us. You know we constantly get updates and then obviously with this bill it'll be. You know you'll sit in some classes and you'll do a lot of reading after the fact.
Speaker 1:Well, we're already running out of time here in the first segment. So people stick with us. The first segment, so, um, people stick with us. Um, again, this show is brought to you by Piper's Auction and Realty and Piper's Land Management. Come join us after the break and we'll get into the big, beautiful build.
Speaker 2:Thanks, for staying with us.
Speaker 1:You're listening to America's Land Auctioneer. I'm your host, steve Link, broker for Pfeiffer's Auction and Realty, and if you've missed any part of this show, head over to Pfeiffer'scom and search us, or search us on Apple and Spotify and get all caught up Again. Thanks to our sponsor, pfeiffer's Auction Realty and Pfeiffer's Land Management, we'll help you sell, buy and manage your farmland with unmatched experience, all right. So, kent, if I could shoot just a number in the air and you'd probably know what it's related to, because the tax code goes by a lot of numbers, right, and acronyms and numbers.
Speaker 1:We got the 1031. We got the 1033s. We got the 721s, we got the 179 deductions and 180, the soil and fertility and I want to remind listeners, if you need to go back and listen to that episode, the Section 180 has been a hot topic in the farm world and that expense deduction and hopefully we get a chance to talk about that here. But the 167, I just go on and on and I did make a summary of some of those tax codes a couple months ago and I'm going to have to update it here with this big beautiful bill to make to make sure that it's it's up to par. But let's talk about that big beautiful bill and and and see what, what, what's your, what's your thoughts on it?
Speaker 2:The big thing with the big beautiful bill is is continuity. So back in 2017, with the original tax, the Trump tax bill, a lot of the provisions were for 10 years and those provisions were going to expire in 2026. So let's look at it like this If Congress would have done nothing, if we would have had a different administration, the current tax bill would have sunset and we would have had probably the largest tax increase in the history. That was just the code in place.
Speaker 2:And so when the talking heads on the CNN or the MSNBCs come out and say, hey, this is the biggest tax cut in history for the wealthy, for the rich, that's kind of misleading because they were basing it on 2016 tax rates. They weren't basing it on what we've had for the last nine years. So when you look at it, the fact that we just have Current law being expanded, making permanent, there's not that big of a change in this big $4 trillion or $3 trillion reduction in revenue. That's not there. That's if we would have had gone back to the higher rates. So it's somewhat misleading. So I look at it more from a continuity standpoint. So I got a business person, whether it's a farmer, whether it's a manufacturer, somebody that's in sales, we know what the tax rates are going to be and the top rates, and, and then they can make decisions in regards to that.
Speaker 1:Yeah, you make a good point, cause I know back in 2008, um, I believe it was there that timeframe when there was supposed to be some tax changes and capital gains tax rates were were were potentially going to change.
Speaker 1:We just had this flurry, this rush and maybe it was 2012, I can't remember but just this flurry and rush to get it closed before the end of the year, because people knew what the current capital gains tax rate was and so they just rushed, rushed, rushed, rushed and we did deals up to that last week where we closed things. We got a purchase agreement, we closed things within five days, which is really unheard of here in North Dakota, because we're an abstract state, it takes a little bit more time to do title work than other areas of the country. But now I can talk to sellers who are strategizing about selling and if they have a tax implication, we can. We can say, well, maybe we want to close on part of this farm and then 2025 and part of it in 2026. I mean, you close it, may it just be a week or two apart and the end of December and the beginning of January, and get yourself into two different tax years, depending on what their situation is and they're like, oh really, we can do that and that's nice.
Speaker 2:And you're dealing with the same set of rules, whereas before what you're talking about there is there would have been a rush to get things done, whether it would have been from a purchasing standpoint, because the rules on depreciation we're going to go back to more cronian rules where we didn't get the accelerated depreciation, there was the potential and the change in the uh, the estate exemption. So again, this it provides um more steady, um work throughout the year, because you know a lot of people buy stuff at the end of the year just to get that rush in. Well, now you can buy it beginning of the year, end of the year, middle of the year. You know what the rules are going to be.
Speaker 1:Yep, yep, yeah. You see all those ads, the Section 179 depreciation take advantage of that, take advantage of that and hurry up and do that. And you know, I got myself caught into that where I wanted to do some of that. And then you look for a pickup for my business and just couldn't find them on the lot and I'm like, oh my goodness, now I'm going to have to pay more tax and things. But I agree, I think that continuity is really important.
Speaker 2:Well, and then what happens in that case too is you have a lot of times you have policy or tax planning driving your financial decisions and you know I get the calls. You know the 15th of December it's like how many pickups do I have to buy? Or do I need to buy a new payloader or whatever? And you know I like to tell people is you know if it can make you money, buy it, and are you going to buy it anyways? But you know just the purchasing just to save taxes. You know some days and yeah, yes, we like to focus on minimizing taxes and keeping your tax bill as low as possible, but you know, some days you know you only can defer so much and you only can spend so much money, and it gets to the point, you know, you might have to start paying taxes. And I know some people out in the farmland and and uh, you know that that that's they. They don't want to hear that, but uh, you know, sometimes it's okay.
Speaker 1:And I and I've always appreciated that about you Cause we've had those conversations hey, should I go out, Should I rush out and buy this, um, this thing? And and you're exactly right, because in a normal setting equipment depreciates, you know, pretty quickly in value, and so you have to look at that, yeah, you save this much tax, but if it depreciates and you're not making money on it, then it's just not a good financial plan. So you know, what are some other hot topics on the big beautiful bill that you're getting asked about?
Speaker 2:Well, the big ones are it's depreciation, you know it its tax rates. So, again from a business perspective and this applies to the farmers, this applies to the manufacturers it's called the qualified business exclusion and the long and the short of it, the C-Corp rates were dropped quite considerably in 2017. So, to help balance it out, instead of dropping the individual rates more, if you were a pass-through owner, s-corp partnership and you were a profitable business, had employees, had assets, you're able to exclude a portion of your income. It's 20%, so it's a large number that you're able to exclude. So that number went from 20 to 23%. So, again, if you're making a million dollars in your operation and again, I don't care if it's a manufacturing business, it's a trade business, you're in sales, farming, value added on the agriculture side then that's a $30,000 deduction for you and that just comes off of your adjusted gross income. You're probably in the top tax bracket at that time. So, again, without doing anything differently, you just had a $30,000 deduction in your income, save $10,000 in taxes.
Speaker 2:Now people on the left will say, oh well, there's the rich guy, the million dollar, you know wage or million dollar earner getting a $10,000 tax saving. But you know, and I know it, you know that person. What are they doing? They're taking their money, their money, and they're investing it back in their business. And that's, I think, one of the biggest misnomers out there with the with the higher, the higher end earners is. You know, they're not sitting on a lot of cash, they're, they're, they're putting that money back to work. So you know, if I save $10,000, $20,000 in taxes, I'm immediately looking hey can.
Speaker 2:I add more staff, you know, can I buy more equipment for my business? And all it does is just stimulate. And also, the philosophy is, you know, I think, steve, you're better off allocating your dollars and putting them into the economy versus giving them to the federal government or the state of Minnesota and letting them decide what to do with your money.
Speaker 1:Yeah, and we talk about this region all the time. You know we're a farm-heavy region here and so when the farmers have a good year, pickups get sold, farm equipment gets sold, all of that stuff, cars and just the economy in the Red River valley is is so much better and it and it and it just keeps spreading. So I think that's, I think that's an important point that's just it.
Speaker 2:And again, people don't understand. People need to understand and I think you're, you're, you know your audience will will grasp this. But you know, if you get a windfall, whether it's a good crop, whether it's a a a, a reduction in your taxes, I'm going to invest it. And you know your people buy land, they buy equipment. You know they'll make the land better, they'll do the tiling, they'll build bends, I mean.
Speaker 1:Holy cow, we ran out of time already in this segment. Stick with us. We'll be right back after these messages. Again, thanks for staying with us. You're listening to America's Land Auctioneer. I'm your host, Steve Link, Pfeiffer's Auction and Realty. If you miss any part of today's show, head over to Pfeiffer'scom or you can search us on Apple and Spotify to get caught up. And thanks again to Pfeiffer's Auction and Realty and Pfeiffer's Land Management. They'll help you sell, buy and manage your farmland with unmatched expertise. All right, we cut it short. Last segment we're talking about the big, beautiful bill. We're talking about some of the provisions that have stuck. I want to talk about R&D. I want to talk about bonus depreciation, because that's something that we've done in the past. Is bonus depreciation. Did that fall through in this bill?
Speaker 2:Yes, it got codified. So what happened with the bonus provisions back in 2017, 2018, and we got 100% depreciation bonus for the first few years. Then last number of years it's been dropping by 20%. So I believe in 2025, we would have only gotten 40% bonus depreciation. This year maybe it was 20%, but now that goes back retroactively and I believe you get a hundred percent bonus depreciation this year. So again, people that again talking about those persons that you know were looking to buy something and weighing how much depreciation they would have got they're going to get additional depreciation this year because we get the a hundred percent.
Speaker 1:Nice, nice, All right. So I've talked a little bit about, I've heard a little bit about R&D, some of those tax credits. I know in the past episode we've had companies like 701X on the show talking about their ear tags that are solar powered and remote to track their cattle and that's really interesting. So go back and listen to that episode if you get a chance. But I would imagine somebody like that can take advantage of some of this. I don't know if it's the new tax laws that they can take advantage of.
Speaker 2:Well, research and development tax credits have been around forever and one of the problems with R&D credits is they've always been under a two-year plan. They've only been available for two years and then every two years they have to go back and get extended Back in 22, 23,. They made the rules really tax detrimental. So if you were a larger company and had a lot of R and D work and when we talk about R and D work it's really it's, it's a broad, it's a broad spectrum that will qualify for. It's just a matter if you're trying to do something different. So a lot of people will look at it. And again you get in small town North Dakota, minnesota, uh, south Dakota and it seems like when you drive around every town has a small business doing something employing right, 10, 20, 30 and 30 and people and you know they might down by winter. They might be doing an add-on product for bobcat I.
Speaker 2:I know up north there was a, an attachment for uh combines. That was done. Um, for strage hop. Again, you know, up in Hillsboro working with the Cedar.
Speaker 2:So, and again, you know they're not the primary manufacturer, they're not the Daigleman, they're not the John Deere, they're not the Bobcat, but they're just doing add-on products or support products. Well, if you go into these shops and seeing what they're doing, you know they'll have scrap metal laying around, they'll have computers sitting there and they're trying to decide. Well, you know, they're modifying their process. They're trying to make the widget better, they're trying to build that better proverbial mousetrap and, as a result, all that time and energy that they put in, or that trial and error, that's eligible for a federal and state tax credit. And again, you just need to get that certified. So again, if you're a profitable business and you're, you're, you're designing things and the government will pay for, for a portion of it. And again, stop and think about what does it do? You know I'm designing something, I come up with a product and I can sell what.
Speaker 2:And again, small town, small town, america. And you know they're innovative. And all of a sudden, with the internet, they're selling stuff all over the country. You know, I had a had a welder friend of mine that was asked to make something. Well, next thing, you know, he gets it patented. Now he's flying out to Oregon to sell it out in Oregon next week and he's selling down in Texas, minnesota, all around the country. Well, again, it's an R&D tax credit and he gets a credit on his tax return. But a lot of complexity with this bill. A lot of people were nervous about it. Again, going back, you know, 90s, early 2000s, it was always deemed it was an audit risk. But in today's world it's really not, because there is so much innovation out there.
Speaker 1:I think you make a great point. Our rural humble attitude is oh, I'm not a researching developer, and you start asking those questions. And they really are. They are really ingenious products that are coming out from the upper plains here. So, all right, that's R&D. The other news cycles, the tip credits and Social Security deduction and some of the other state and local things. What's your perspective on some of that?
Speaker 2:Well, they're all beneficial. So I look at it like this I want you to have more of your own money. So, again, from a Social Security standpoint, it's not what the president had talked about on the campaign trail. He wanted to change it, you know. So all social security would be taxed. Today, if you earn too much other income besides your social security, up to 85% of its tax. So again, if you have somebody that has farm rent you know dividend from investments, maybe you know they're still working and collecting social security up to 85% of your social security could be taxed.
Speaker 2:Um, you know, the thought during the uh, the campaign was that you know the president would try to get that in entirely repealed and there'd be no set, no, no tax on social security. That didn't happen. For a qualifying person, it's a $6,000 deduction from AGI for each person. So a husband and wife could potentially get a $12,000 reduction. Now again, if you go and read the OMB, the CBO General Accounting Office, they say 75% of the people that receive social security, that's going to zero out their social security. So so again, for a lot of people that that's a benefit. And again, you know this person, they might be on fixed income. And you talk about the benefits. You know we've talked about the manufacturer who might've gotten a bigger benefit, but you take somebody that's on social security fixed income. If they're not getting taxed on $12,000 at a 15, 18% rate, that just saved them $2,000. That is a big deal.
Speaker 1:Right, exactly, yeah, one of your, one of your points that you brought up to state and local tax deduction and talk about that for some of the Minnesota listeners.
Speaker 2:This is really going to be potentially a benefit for them. So, again, when the 2017 Act was passed, it was kind of interesting. So, in my practice, I would say 80% to 85% of the people actually had a tax lowering with the tax bill. The people that didn't were Minnesota, illinois, new York, connecticut, california, interesting, interesting. So, again, was this something? Was there a little politics involved? I don't know.
Speaker 2:And the reason for that is they lost a big deduction because of state and local taxes. So you take somebody that makes $300,000 over in Moorhead, they might pay $25,000 in state taxes, which under the old bill, 2016, was deductible. Under the Trump Tax Act of 17,. Only $10,000 of that was deductible, so they lost a big deduction, whereas in North Dakota, south Dakota, we don't really pay any taxes for the state, so this really didn't impact us as much. Now, with the new tax bill, the state and local exclusion went from $10,000, or deduction went from $10,000 to $40,000. So, again, a Minnesota resident, all of a sudden, you own a property, you have a mortgage, you have a potential $30,000 deduction. That wasn't there before.
Speaker 1:Wow, okay. Well, I want to tease this a little bit for the next segment that I really want to talk about some of the things the cash balance, pension plan that you talked about, because those are some big words that some of our listeners aren't going to think, oh, that doesn't pertain to me, but it really could. But before I also want to talk about the Section 180, you know, the soil and nutrient deduction provision of the tax code and it's something that I, you know, hadn't heard about three years ago, you know, two and a half years ago. You start to hear a little bit, and now I hear about it quite a bit. Is your firm coming across that section?
Speaker 2:Yeah, it's weekly that we're getting asked about and it's just not from the farmers, but again it's. You know, it's the land managers, it's the bankers, it's the crop insurance people because, hey, their clients are hearing about it and you know it's just. It's just one of those things out there that you know it's been in the code since the sixties. You know, somebody has just, um, you know, cracked the code and figured out how to do it in an economical manner so that the farmer, they can go out or the landowner can go out and get the deduction. And I look at that as a permanent, so as a permanent tax deduction or permanent deduction, versus just a temporary. You buy a combine, take the depreciation While you sell it you recapture, whereas with the Section 180 deduction, that's potentially a permanent deduction for you, so you never have to recapture, whereas with the, with the section 180 deduction, that's potentially a permanent deduction for you, so you never have to recapture that. So it's really a strong tool out there and I and then I recommend anybody to look into it.
Speaker 1:Yeah, and that and I want to remind listeners kind of how that process should work is Ken's not going to go out there and take the soil samples or do the analysis on what the what the nutrient was valued at in, you know, a year and a half ago? That's companies like Arthur Companies and Bosa Afra and some of those, and if you need to get a hold of them, contact me, go to our website, shoot me an email. I'll put you in contact with the right people. But once that company gathers all that information, they then provide it to your tax provider in Kent and Kent and his team then will fill it into your appropriate tax codes and such right.
Speaker 2:That's right. And again, one thing with depreciation. We always talk about 100% depreciation and the one thing that I'd like to talk about with depreciation. You know we always talk about a hundred percent depreciation and the one thing that I like to talk about. With a depreciation, we can catch us on the last, last segment, but you know we don't have to take a hundred percent in the year.
Speaker 1:Sure.
Speaker 2:And and again. No different with with this deduction either. You know there's some, there's a lot of flexibility with it, so we can kind of tailor it to your needs and kind of massage the numbers a little bit so you don't have to take the deduction all at once.
Speaker 1:Yep, exactly. Well, this is all great stuff. We ran short of time again on this segment, but, yeah, next segment we're going to talk. We're going to finish up that thought and talk about some other stuff here. This is great stuff, kent. A huge takeaway for landowners, again, thanks to Piper's Auction Realty and Piper's Land Management, your trusted partners when it comes to land sales, farm management. Stay tuned, we'll be back after these messages. You're listening to America's Land Auctioneer. I'm your host, steve Link, with Piper's Auction Realty. We've had some great conversation here today about taxes, really everything about taxes, the big beautiful bill and Section 180 and all that we're joined here today with Kent Busick at Busick Associates and all that we're joined here today with Kent Busick of Busick and Associates. You know, since this is the last segment, we got a lot of things we want to try and get in before this, but if you don't have a chance to hear some of the subjects that you want to hear, kent, how can they get ahold of you?
Speaker 2:The best way is call the office 701-356-7867. That's 701-356-7867. That's 701-356-7867. You know myself, my partner, brent Amber, you know we'll be willing to sit down and just talk with you and just kind of talk big picture.
Speaker 1:That's awesome. Yeah, you've got a great team over there. It's always refreshing to talk to everybody there. So, okay, we were talking about the Section 180 and you know how scary that can be for somebody that hasn't heard about it, but it's been around for a long time.
Speaker 2:Yeah, like we mentioned, it was originally codified in the 60s and again it was just cost prohibitive to do. And then more recently, the group out of Iowa Arthur Company, stephanie up there, you know they've just figured out how to do it so it's economically viable to the landowner. And when I make the comment earlier from the last segment that what's different about this deduction versus a deduction for a combine or a tracker, this has the potential to be a permanent tax deduction. Sure, a temporary tax deduction is. You know, I buy the tractor, I depreciate it, I sell it, I have to recapture.
Speaker 2:So I just get the deduction for a time period and basically you're working out the time value of money, the savings, whereas the Section 180 deduction is a reduction in the basis in your land. So you pay $5,000 for the land, get a $1,000 deduction for the crop study, your basis is now $4,000. Now typically what you'll see is the landowner is not going to sell the land, they're either going to, you know, they're going to keep it and pass it to the next generation, which in turn they get to take advantage of the $15 million estate exclusion. So again, so that million dollar or that thousand dollar deduction that they took on the on the farm, their heirs, the beneficiaries of the estate. They never pick up that income.
Speaker 1:Yeah, yeah. And this is, this is so huge. I was just talking to somebody yesterday and and you know high earner, you know non-farmer, and he's like, oh, I can't buy land. There's no depreciation. Well, there is, you know, and if you want to make some improvements, if you want to add fence or water or drain tile, all of those assets can be depreciated.
Speaker 2:Or, like we've talked about in the past, that, or if the land was previously tiled. So again, you know you can go out and buy a piece of land and I'm sure your sellers are catching on to this that, hey, I'm selling a land to you, steve, but you're going to get a deduction for the soil, you're going to get a deduction for the tiling. Hey, I'm getting more money for this. So they're smart.
Speaker 1:Yep, yep. So it's a. It's a new conversation that we're having all around land sales, so it's, it's a real big deal. You touched on something too the $15 million estate. What's the best way to term it?
Speaker 2:The estate tax exclusion or the gift tax exclusion. So now for a married couple, husband and wife $30 million. And that's always been the discussion that you know, and they always talk about the plight of the poor farmer that you have to have this high exemption so the farmer doesn't have to, or the heirs don't have to sell the farm, or the next generation doesn't have to sell the farm, or the next generation doesn't have to sell the farm. Well, again, this is substantial because it was going to drop back down to under 10 million dollars.
Speaker 1:So again, now the farm family can pass more on to the next generation without, without an estate tax and they didn't touch um the stepped up basis rule, right, they didn't mess with that um, which was was? It was a topic, they didn't. Uh, did they change any of the capital gains rates? Do you, do you know?
Speaker 2:no, the capital gains rate stayed the same. So we're at 20, and then there's the potential 3.8 for medicare, but again, there's some workarounds for that too.
Speaker 1:So yep, so so that's that's like we talked about earlier. Now we have some set rules that we can. We and you know a lot of our land sales and you know this Kent is due because of generational transfer right. So mom or dad died and the kids get it, they get a stepped up basis. It's really advantageous to think about selling at that point because they can take that money in. And now, with the $15 million exclusion, you know now you're not going to get hit on that side of it. So it's a really opportunistic time to maybe sell that land and do something with that cash and not feel like you haven't given it all up. So okay.
Speaker 1:So we are about halfway through our last segment and you talked to me the other day about a cash balance pension plan and that piqued my interest. And you know, like you mentioned, you know, some of the farm families. They are small business. You know Everybody thinks that to be a small business you need, you know, 50 employees and such. Well, you know, having seven employees, that's a small business and having two employees or one employee, that's a small business. Talk about this cash balance pension plan.
Speaker 2:So I'm going to speak specifically to your farm. Farm, farm-based, ranch-based, no-transcript got all these bins and they're looking at a big recapture on the back end. If they have the farm sound which you have to you deal with on the auction side, yep. So one of the things just to it's very specific code section out there that it's called a cash balance pension plan and basically the best way to describe it. It's a turbocharged 401k and it's geared towards people that need to catch up on their retirement. So the ideal client is somebody that's 50 years old, makes money and doesn't have a lot of employees. And the key with a lot of employees is you have to let all your employees participate. So, again, if you just have a husband and wife operation, that's perfect because all the benefit goes to them. So again, instead of going out and buying that new pickup at the end of the year, going out and buying that new combine, you can do a pension plan that you know.
Speaker 2:I've seen situations that people have been able to put a half million dollars away. And and again, it's. It's based on income, it's based on age, it's based on the number of employees, but it's, it's. It's a retirement plan. It's. It's a separate retirement plan from your 401k. We often do it in association with 401ks and again it's just a different tool. So, instead of you wanting to go out and buying that depreciable asset or prepaying for the chemical, prepaying for the seed at the end of the year, it's just a different tool out there and again, it's a very narrow segment of the taxpayer that's able to take advantage of this. But again, once they start utilizing this and start putting $200,000, $300,000 a year away into an investment, it's just a diversification of assets. Now, a lot of times you know the more conservative clientele. They don't want to do that. They want to have the land, they want to have the building instead. But again, it's just a tool, a tax savings tool that I'm seeing used more and more often, talked about more and more.
Speaker 1:Well, and I think that that could also come into play for planning for people, because if they're going to transfer their farm to the next generation and maybe you have one child that is farming and the other ones aren't. Well, now you have this built up cash that you can gift and you can try and get things back balanced between your gift to the next generation and it might not be always equal, but if it's fair to everybody, then that's important.
Speaker 2:And you know this is funny, because you know we haven't talked about this, but I've got this, exactly this exact same situation. We have the farm son, we have the person that's running the family business, and then we have the third child that's off the farm. Well, the third child, the way we have it structured, they get the retirement account.
Speaker 1:Yep, Wow. So okay, we've covered a lot here, folks, and we didn't get everything explained, but we're out of time again on this last segment. So, Kent, you said your phone number and business. Repeat that again for our listeners.
Speaker 2:The phone number. Best way to reach me is 701-356-7867. Just let them know that you you heard me on on on Steve's show this morning Steve and Kevin's show because you know you like to hear that as well, because it's always good to track. You know where, the, where the people are coming from, and and and um, you know that's awesome.
Speaker 1:All right people, thanks for staying with us. Uh, go to pyferscom if you need any of this and you want to listen. Re-listen to this show Again, thanks to our sponsors, Pyfers Auction Realty and Pyfers Land Management. They'll help you sell and manage and manage your farmland with unmatched expertise. Take care.