Breeding Decisions - Use ALL the Tools Available to You

Our alpacas are beautiful animals and they are very calming to the spirit--but in the final analysis of our individual business plans if we are not trying to develop a business with a profit motive involving more than the sale of the alpacas themselves then what are we really offering. Developing an alpaca with low micron, high density, bundled fiber which remains consistent throughout the fleece with excellent conformation should be our goal. As we see it consistency is almost more important than the micron count as it facilitates the ease of processing the fiber. All classes of fiber can be used for a variety of purposes but if we aim for consistency it will help to minimize the overall costs of processing.

As we make our breeding decisions each year we need to be sure to use all of the tools currently available--such as fiber sorting records, EPD (estimated progeny differences) and histograms. And, of course, prior breeding history is a resource that costs us nothing--incrementally--as those costs are in the past. Each breeding decision is critical to the success and growth of our respective farms.

Those of you who are regular readers know how committed our farm is to the philosophy and benefits of using the Certified Sorted™ method. Because of that commitment we will start posting the newsletters we receive from Coarse Broads on this blog. Their newsletters are a wealth of information helping us to understand the process and the path to developing our herds into a sustainable business--and isn't that what we are all trying to accomplish. Here is the link for Coarse Broad's April Newsletter as well as the archive of prior newsletters. Note the subscribe button toward the top of the page.

If you have purchased animals from us or any other farms affiliated with the Ideal Alpaca Community then you have the benefit of being connected with the only active Alpaca EPD program in the country. Follow this link to learn about the IAC--and membership is currently free. One of the great benefits of membership is that it helps you coordinate and manage your shear list. Once your herd information is entered, selecting the sequence of shearing your animals is simple and the system is also designed to print all the transmittal forms required for submission of fiber samples. As the size of your herd grows these tools become more and more valuable--especially when you have histograms processed for all the alpacas in your herd.

Bottom line--look at the tools available to you. Does the cost out weigh the value provided. Fiber sorting is $15 per animal; histograms for the IAC $9.50 per sample--the benefits of using this information--priceless. They are the ultimate tools for making your breeding decisions.

Snow River Alpacas Annual Shearing

Tomorrow Peggy is traveling to Colfax, CA to help Snowy River Alpacas with their annual shearing day. Robyn Kuhl from Coarse Broads will be there to sort the fiber.

And don't forget on Saturday, June 27th Carrie Hull from Coarse Broads will be presenting the seminar "A Good Yarn" at our farm in Astoria, OR. The cost is $50. As with all seminars presented at our farm, the cost is waived for clients of Alpacas at Tucker Creek. A continental breakfast will be served at 8:30 am with the seminar scheduled for 9:00 am. We will be shearing the following two days. If you would like to help please contact us on or before Friday, June 26th so we can include you in our duty roster (our email and phone numbers are in the box to the right). If you wish to watch the event but not get dirty (and we do tend to get dirty) the cost of admission is a nonperishable food item for the Clatsop Community Action Regional Food Bank or the Clatsop County Animal Control Shelter.

If you are near Snowy River Alpacas this weekend through Tuesday and would like to learn more about the Certified Sorted™ method please contact Hailey at 530-346-6885 so she and Robyn can be expecting you.

Willamette Alpaca Breeders Association

The Willamette Alpaca Breeders Association invited me to join them for their meeting on February 12th to discuss the current tax laws and the impact the economy has on the alpaca industry. As part of that invitation, Maren Anderson from Evergreen Terrace Farms interviewed me for their on-line series Paca Talk. The link to that interview is below.

http://www.pacatalk.com/2009/02/paca-talk-6-peggy-stevens-interview/

Between traveling and getting sick, this is the first chance I have had to share this interview with you. We would also like to thank Maren and WABA for their kind invitation.

Smile & Move

After several posts related to taxes here is something to truly smile about. smile&move is a call to positive action . . . to be happy and do something . . . a reminder of how we should approach our work (whether that work is done in the office, on the field, in the classroom or at home.)

And Happy St. Patrick's Day--after all Peggy is 1/8th Irish.

More News from the IRS

The IRS has sent two more email blasts which contain items that are on point as all of us are feverishly trying to complete our 2008 tax returns. If you want to get a head start on preparing 2009 tax returns join us on April 13th at Northwest Alpacas for our Alpaca Taxes and Business Plan Seminar.

Issue Number: TT-2009-51

Inside This Issue

Seven Important Points about Penalties

Taxpayers who do not file their return and pay their tax by the due date may have to pay a penalty. Here are seven things you should know about failure-to-file and failure-to-pay penalties.

1. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return and explore other payment options in the meantime.
2. The penalty for filing late is usually 5 percent of the unpaid taxes for each month of part of a month that a return is late. This penalty will not exceed 25 percent of the taxpayer’s unpaid taxes.
3. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
4. You will not have to pay a failure-to-file penalty if you can show that you failed to file on time because of reasonable cause and not because of willful neglect.
5. You will have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid.
6. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty.
7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

Link: Avoiding Penalties and the Tax Gap

Is it Too Good To Be True? Home-Based Business Tax Avoidance Schemes

NOTE: This headliner is current through the publication date. Since changes may have occurred, no guarantees are made concerning the technical accuracy after the publication date.

Headliner Volume 263-March 1, 2009

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes.However, the Internet may provide a new medium for promoters to sponsor illegal tax avoidance schemes. Many of these schemes involve the use of fictitious online businesses including online retail and services, online auction sales, and bartering. Some of these tax avoidance schemes suggest the conversion of a hobby or recreational activity into a “business” in order to claim personal expenses improperly as business expenses.

Taxpayers should regard as highly suspect any investment scheme or promotion that claims to allow a person to deduct what would normally be personal expenses and not ordinary and necessary business expenses. As always, a business must truly exist prior to claiming any business expenses. Read on . . .

New Law Extends Net Operating Loss Carryback for Small Businesses

This was released by the IRS today--one note for those of us who farm for a living--the tax code already allows for a five year carry back on farm related losses--this will allow any non-farm losses to also be carried back five years.

IRS To Ensure Refunds Paid Timely

Washington – The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS today updated the instructions for two key forms – Forms 1045 and 1139 -- that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”

With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.

Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.

The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.

For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.

To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.

There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.

If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.

Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.

Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.

The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.

In addition, Frequently Asked Questions have been posted on the IRS.gov web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.

Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s return is filed, as listed on the return instructions.

Accelerated refunds paid via Form 1045 or Form 1139 is described as “tentative” because the applications for refunds are potentially subject to review at a later date. Form 1045 Instructions and Form 1139 Instructions on http://www.irs.gov/ provide more information on the accelerated refund option.

Related Items:
Revenue Procedure 2009-19
Questions and Answers for ARRA - Section 1211 5-year Net Operating Loss Carryback Election for Small Businesses
Publication 536-Net Operating Losses for Individuals, Estates and Trusts

Five Tips to Avoid Tax Time Stress

Monday is the filing deadline for corporate returns--since the 15th falls on a weekend the deadline is moved to Monday, March 16th. For partnerships and individuals the deadline will be Wednesday, April 15th--no reprieves for the rest of us. So just in time to ease our tax frustration our friends at the IRS released the Tax Tips shown below.


Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress-relieving tips to help you.

1. Don’t Procrastinate – Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

2. Visit the IRS Online – In 2008, there were more than 330 million visits to IRS.gov. Anyone with Internet access can find tax law information and answers to frequently asked tax questions.

3. File Your Return Electronically – Nearly 90 million taxpayers filed their returns electronically in 2008. Aside from ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you’re due a refund, the waiting time for e-filers is half that of paper filers.

4. Don’t Panic if You Can’t Pay – If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. More than 75 percent of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov. To find out more about this simple and convenient process type “Online Payment Agreement” in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File – But Pay on Time If the clock runs out, you can get an automatic six month extension of time to file to October 15. However, this extension of time to file does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers needing Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

Links:

Official Payments Corporation
Link2Gov Corporation
Electronic filing
Free File
Electronic payment options
Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF)
Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns

Above courtesy of IRS Tax Tips Issue Number: TT-2009-50