3rd Annual Alpaca Woods Ranch Open House

Mark March 28th on your calendars as the 3rd Annual Open House at Alpaca Woods Ranch.

This event is our chance to share these wonderful animals with those of you who have been pondering your interest in this growing industry as well as those of you who have stopped by before. Plenty of changes have occurred in the last year—we have added more pastures, new shelters and, of course, the best part—new crias. Refreshments will be served. There is no charge but we would appreciate an RSVP just for planning purposes.

Again this year, Peggy Stevens from Alpacas at Tucker Creek (http://www.alpacadigest.com/) in Astoria, OR will be our featured speaker addressing the tax consequences of alpaca ownership. Peggy is a retired CPA with many years of small business experience. She and her husband, Dave, have been raising alpacas since 2003. She will be discussing the great opportunities this industry has to offer as well as some of the pitfalls to avoid. Time will also be allotted for your personal alpaca tax questions. Among her topics will be the criteria applied by the IRS to classify an operation as a business instead of a hobby; how to leverage the purchase price of alpacas by using funds which might otherwise pay current taxes; the importance of a business plan and other topics of interest at a time when tax code revision is again under serious consideration. She has been a featured speaker at the 2008 Alpaca Owners and Breeders Association National Conference; the Alpaca Institute at Northwest Alpacas as well as regional affiliate meetings.

The Open House will be from Noon to 5:00 p.m. The tax presentation will be held from 1:00 – 3:00 p.m. Please advise if you will be able to join us on March 28th by phoning Ronnie at (770) 972-1247 when we will also provide you with driving directions.

Year End 2008

Wow—how I hate this cliché—but it is so true! Where has the time gone? 2008 has been a wild year. The alpaca industry continues to provide us with a very good living despite the issues with the economy. Prices may be a tad softer than a year ago but they are holding strong and continue to prove that the industry is and will remain viable.

For those of you who have been to our farm--here is an unusual shot--and it also displays what the alpacas on the Oregon coast think of snow. If you look really close you can see a couple of heads--but when there is snow they only seem to venture out to the pastures when the sun does.

This blog update is mainly made up of tax issues—not a surprise this time of year. The provision that continues to be one of the largest tax benefits all small businesses enjoy is Section 179. You only have four more days to take advantage of the increased deductions available in 2008. The limit for this year is $250,000 on qualifying asset purchases not exceeding $800,000. That deduction will be reduced to $133,000 on qualifying asset purchases not exceeding $530,000 next year.

Also available in 2008 is the 50% bonus depreciation deduction. There is no similar provision for 2009. This deduction only applies to new asset purchases. A maiden female alpaca qualifies as new for this deduction.

So review your tax position and seize the opportunity to take full advantage of these deductions before the clock strikes midnight on the 31st. It is not too late. Should you make the decision that buying your first alpaca or adding to your existing herd is the correct move for your particular tax situation be assured that contracts can be finalized up until that time. Much of the work can be accomplished via email, phone and fax. You do not need to take possession of the animals by midnight on the 31st.

If you have questions about any of the topics in this update feel free to contact us—we don’t want you to miss out on a single deduction.

Enjoy the remainder of the holiday season. We wish you a rewarding and productive 2009.

Don't look now--but tax time is almost upon us!

Call me Scrooge--but this is just a little reminder to encourage you to start thinking about the items that need to be completed by December 31st. The IRS has recently published two very helpful releases.

One details the various credits available as well as deductions you may be entitled to if you take action by the end of the year. Just click on the title above for the full text. Not specifically listed--but very important--is your Section 179 deduction for the year. You must have purchased (financing is OK) and placed in service your qualifying asset by December 31 for Section 179 to apply. Don't forget the limits in 2008 are significantly greater ($250,000) than they will be in 2009 ($133,000).

The second announcement relates to the download version of Publication 17. The IRS has placed its comprehensive tax guide for individuals on IRS.gov, updating it for tax year 2008. The updated on-line version of IRS Publication 17, “Your Federal Income Tax,” contains more than 900 interactive links. Publication 17 has been updated with important changes for 2008, including information on the new recovery rebate credit, new first-time-homebuyer credit, and an additional standard deduction for real estate taxes. It has been published annually by the IRS for more than 65 years and has been available on the IRS Web site since 1996. As in prior years, the publication provides information on how to file an individual tax return, what to include as income, how to calculate capital gains and losses, how IRAs and other expenses can affect how much income to report, whether to take the standard deduction or itemize, and how to figure taxes and credits. Publication 17 is available on line, however, those who do not have access to the Internet can call 1-800-829-3676 to request a free copy from the IRS. Printed copies will be available in January 2009.

Wow--just about anything you would want to know about income taxes. Enjoy the holidays--but do spend some time reviewing these releases so you can take advantage of every credit and deduction to which you are entitled.

Happy Thanksgiving

What better way to say thank you to each of you who follow our blog than to share a wonderful Thank You we received following a recent alpaca visit by a local group of little ones and their mothers.

Here is a photo of our visitors and their wonderful thank you (click on each to enlarge). These visits are always so much fun. The critters seem to enjoy them as well. Whenever we have visits including such energetic and curious minds I always wonder if any of them will grow up to be alpaca breeders. Hope so.

We wish you a heartful Thanksgiving and appreciate your ongoing support of our blog, website and breeding program. Enjoy!

IRS Announces 2009 Standard Mileage Rates

IR-2008-131, Nov. 24, 2008

WASHINGTON — The Internal Revenue Service today issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

55 cents per mile for business miles driven
24 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2008-72 contains additional information on these standard mileage rates.

Search for Loans, Grants & Financing

During this difficult financial time it can be frustrating to find the capital you need to start or expand your business. Here is a great site to help you out. This is another one of the tools found at Business.gov. Search for Loans, Grants & Financing Just go through the 14 questions and hit the search button. It will give you a list of the potential funding sources.

But don't forget--another great source of financing is the seller of the alpacas you are wanting to buy. Most breeders you will find are like Alpacas at Tucker Creek and will work with you accepting payment in every form from cash, to credit cards to payment plans geared to your financial needs.

Also during the last week, the Small Business Administration (SBA) sent out a news release that "announced important loan program changes to help the agency's lending partners increase access to capital for small businesses". It is very apparent there is much being done in an effort to stimulate the economy.

2008 continues to be the best tax year to start any new business or expand an existing one due to the increased Section 179 deduction currently available at the $250,000 level coupled with the 50% bonus depreciation deduction. The increased deductions come at a very difficult time economically as they are each designed to stimulate the economy but many are afraid to commit to such a large financial obligation in light of today's economic climate. Just proceed with caution and budget a contingency fund to buffer you from any surprises.

2009 Inflation Adjustments-Including Section 179

In a bulletin released on Thursday, the IRS announced the 2009 Inflation Adjustments and Expanded Tax Benefits taking effect 1/1/2009. You can read the full text by clicking on the above title. But you guys all know me--let's cut to the chase! What are the 2009 Section 179 deduction limitations?

$133,000 is the maximum deduction allowed on purchases not exceeding $530,000.

That is a reduction of $117,000 compared to the $250,000 deduction allowed for 2008. To date there has been no legislation extending the 50% bonus depreciation deduction through 2009. Looks like 2008 is the year with the best tax incentives for investing heavily in your alpaca business.

Now here is the rest of the release:

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.

The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.

The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.

The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

Information about the pension and retirement plan-related changes can be found in IR-2008-118. Other inflation adjustments are described in Revenue Procedure 2008-66.

The standard mileage rate has not yet been released. We will keep you posted as soon as it is.

Did I tell you this was the most advantageous tax year to invest in your alpaca business?