News

Section 199A could impact grain marketing decisions

The section 199A deduction in the new tax law could potentially impact grain marketing decisions. Dr. Keri Jacobs, Iowa State University economist, tells Brownfield Ag News the deduction now favors marketing through cooperatives, “Some regions – of the state of Iowa, for example – and, in the Midwest DO have the capacity to handle these harvest-time, or even seasonal gluts of grain that may arise due to local price impacts. There will be other ares where the infrastructure just isn’t there in a cooperative firm to manage those, so then the question is ‘well, how is grain going to move?’”

If the language remains, she says farmers might form their own co-ops where there are none. Jacobs says the new tax code also creates incentives for farmers to consider restructuring as a C or an S corporation, or changing from one to the other, complicating the issue.

She says there is a lot of uncertainty amid several efforts to change the section 199 language in the law, so its best for farmers to meet with their tax consultants.