Brown Bag Topics

At Grimbleby Coleman, we have a really smart team. We also use a bunch of different tools in the course of getting all of those numbers to make sense - so there is always more to learn. We hold  brown bag lunches on a regular basis so different team members can share their knowledge with the rest of us. We thought we might as well share what we learn, in case you have the same questions.

Featured Article

New Case Study: An Ag Family Succession Story
February 4, 2016 AG CASE STUDY:  Succession & Business Planning  "The facts vary such that no two situations are ever the same."  - Jeff Bowman, CPA, Partner and Ag Team Lead SITUATION: A first-generation farmer in Stanislaus County wanted to pass on his individually owned business to his adult children. The second generation planned to maintain and enlarge the operation, which included farming and ag processing. Important to note, not all of the farmer's children were employed on the ranch.   CHALLENGES: The farmer wanted to ensure the children inherited equitably. All parties wanted to limit the liability exposure posed to the farmer as an individual owner and operator. The father and his children wanted to limit taxable income and estate taxexposure for the older generation. The operation needed to be positioned for future growth. CONSIDERATIONS & TACTICS: Limiting tax impact on contributing operations to new S Corp and Limited Partnerships Considering the benefits and burdens of an IC-DISC entity Determining how and through which entity owners should be compensated Cash-basis methods available for farm activities  Important factors for tax planning: Farm income averaging and qualifying types of income Net investment income tax Active versus passive investor treatment Maximizing the domestic production activity deduction Optimizing income for IC-DISC commission purpose FINAL RECOMMENDATION & FINAL OUTCOME: Along with the farmer's attorney, we recommended forming a new operating entity and a separate entity for holding the real estate, reducing risk and providing flexibility. The new operating entity is used to maintain the business services, equipment ownership, and labor for the farming operation. By forming the realty entity, the father was able to conveniently introduce ownership to the second generation. In the end, our Ag team developed a fair, strong succession plan for our client by working with his attorney and taking into account the current and future needs of the operation. OTHER CONSIDERATIONS: Forming entities and limiting liability exposure require a high level of legal counsel. We worked closely with the client's attorney while analyzing succession options. The attorney's estate tax expertise ensured the plans were consistent with future gifting and estate transfer intentions, while mitigating risk.    *FYI: The attorney filed state articles of formation, obtained a federal ID number for each entity, drafted the crop share lease and farm management services agreement, formed the IC-DISC, and drafted the commission agreement. The attorney also created a deed for transferring the land.

Featured Events

Valley Builders Exchange Golf Tournament

We are excited to participate in our 1st VBE Scholarship Golf Tournament! Valley Builders Exchange, Inc., a Non Profit Corporation established in 1947, is set up to provide services to its membership. Our association is comprised of dues paying members in all areas of construction. Membership in the Exchange provides various services and information that may be difficult to obtain on an individual basis.

Featured Staff

Cynthia is a Tax Manager at Grimbleby Coleman, where she utilizes her skills to help clients meet their present needs and future goals.  “Knowing that we can bring clients a peace of mind, even if in just one aspect of their lives, is what makes our work worthwhile.” 

In the past, Cynthia has served on the Board of Directors for the CalCPA San Joaquin Chapter and has participated in the Relay for Life.

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