Federal Gift Amount Raised to $13,000

A person can now give $13,000 per year per person without affecting the amount one can gift during life or pass on at death federal tax free. The yearly allowance is raised periodically along with inflation, but in $1,000 increments. Therefore, the amount has just now been raised from $12,000 to $13,000.

Currently, any gifts above $13,000 per year per person must be reported on a federal gift tax form. Only after gifts over the now $13,000 limit accumulate to one million dollars does the federal government assess gift tax. Also, gifts above the $13,000 yearly per person limit reduce dollar for dollar the amount that can be passed on federal estate tax free. The amount that can be passed on federal estate tax free if no gifts have been made over the now $13,000 limit is $3.5 million in 2009, unlimited in 2010 but under current law will go back to one million in 2011. However, expect the law to be changed before 2011.

So what is one to do? For those who either don’t or won’t have the where with all or else don’t have the inclination to give to others (charities or spouses not included) over a million dollars, don’t worry about the $13,000 limit, give what you wish when you wish and if over the $13,000 per person per year, file a federal gift tax return. For those with assets over one million, if spouses give that doubles the amount that can be given per person per year to $26,000.

Then, giving to more people, not just children but perhaps also to spouses and/or grandchildren can dramatically increase the non-counted limit. So, with 3 children giving also to the 3 spouses can increase the non-counted amount to $156,000. If there are also 6 grandchildren the non-counted limit can be as much as $312,000 and still be given to family members. For additional information visit the newly revised “OSU Extension Basic Estate Planning Fact Sheet Series”, including a fact sheet on giving at:

Small Farm Conference & Trade Show

Are you a small farm landowner wondering what to do with your acreage?  Are you interested in exploring options for land uses but not sure where to turn or how to begin?

Have you considered adding an agricultural or horticultural enterprise but you just aren’t sure of what is required, from an equipment, labor, and/or management perspective?  Are you looking for someplace to get some basic farm information?

If you or someone you know answered yes to any of these questions, then the Ohio State University Extension Small Farm Conference & Trade Show may be the place to get the answers. The show will be held Saturday, March 14, 2009, 8:30 A.M. to 4:00 P.M., Wilmington College– Wilmington, OH.

This intensive conference will give participants the opportunity to choose from over 35 different seminars taught by Extension professionals and industry leaders on a wide variety of agricultural enterprises. Seminars will focus in the areas of aquaculture, farm management, forages & pasture, livestock – exotic and traditional, horticulture – fruit and vegetables, natural resources, Sustainable Agriculture Research and Education (SARE), Organic Production, and marketing.

The program will begin at 8:30 A.M. with registration and the trade show. Sessions are scheduled to begin at 9:45 A.M. and conclude at 4:00 P.M.  Cost of this program is $40 per person. Registration deadline is March 2, 2009. Cost includes handouts, tradeshow, breaks, and lunch.

This Program is Co-Sponsored by: Wilmington College and The Ohio State University.

Registration information can be obtained by going to www.clinton.osu.edu under Small Farm Programs, by emailing nye.1@osu.edu or by calling 937-382-0901. Registration will be due March 2, 2009.

Ohio Cropland Values and Cash Rents 2008-2009

OSU Extension, OSU Department of Agricultural, Environmental and Development Economics (AEDE)

Ohio cropland values show signs of falling slightly while cash rents show signs of leveling off or seeing modest increases depending on the region and land productivity. Ohio cropland values are expected to decrease from 2.4% to 4.9% in 2009 while cash rents are expected to range from a decrease of 0.24% to an increase of up to 1.24%.

The “Ohio Cropland Values and Cash Rents” survey is conducted annually drawing on the expertise of numerous professionals that are knowledgeable of Ohio’s cropland markets. Surveyed groups include farm managers, rural appraisers, agricultural lenders, OSU Extension Educators, farmers, and Farm Service Agency personnel.

One hundred eighteen surveys were completed, analyzed and summarized. Respondents were asked to give responses based on 3 classes of land in their area; “top” producing land, “average” producing land and “poor” producing land. The preliminary survey results are summarized below for the entire state of Ohio (entire state results), Northwest Ohio (NW Results) and Southwest Ohio (SW Results) (these 2 regions had sufficient data to allow for regional summaries). Preliminary results are shown below.

Tables show the average (Avg) (simple average) of each row, standard deviation (Std) of the data for that measure (measure of variability), average plus one standard deviation (Avg+Std), and average minus one standard deviation (Avg-Std). These latter two numbers reported indicate a range within which about two-thirds of the responses in the data for that measure will fall.

Medicaid Lookback Now Five Years

The senior generation of a farming operation is increasingly concerned about the farm assets being drained to pay for an extended nursing home stay. One strategy to protect assets from being liquidated and then used to pay nursing home expenses has been to give away those assets to the younger generation. Not so long ago, those assets had to be given away at least 3 years before Medicaid application, else Medicaid eligibility or payment would be negatively impacted. After that, if assets were in a trust the look back period was 5 years but the original 3 years applied if not in a trust. However, now the lookback period for all assets, whether in a trust or not, is 5 years.

With assets in and not in a trust treated the same, first impression may favor trusts. However, if “strings” are attached to assets in a trust, those assets are considered to still be owned by those at the end of the string. That means the original owner can not be a trustee, have any legal ability to access assets or “pull them back” anytime in the future, can not be the beneficiary, can not sign checks for the trust, thus the trust must be irrevocable. Further, when the trust is funded a gift has been made and a gift tax form most likely needs to be submitted.

Medaid eligibility, lookback and asset recoupage is administered locally by the local Job and Family Services office. The Medicaid booklet, “Transfer of Resources, How Transferring Resources Affects Long-Term Care Medicaid” is available at the local Job and Family Services office and on the web at the Medicaid website at:

Another resource is the “Ohio State University Extension Basic Estate Planning Fact Sheet Series”, which includes a fact sheet on the “Nursing Home Dilemma”. All the 12 fact sheets can be obtained at:

The Nursing Home fact sheet also discusses where Medicare and Medicaid pay nursing home bills, Medicaid income and assets allowed for eligibility and payment and the feasibility and cost of nursing home insurance. If considering nursing home insurance refer to the Ohio Department of Insurance’s “Ohio Shopper’s Guide to Long-Term Care Insurance” at:

Managing the Dairy of Tomorrow Workshop

2009 will be very challenging for the dairy industry. Focused management of production, financial and human resources has never been more critical. Studying management and how it applies to the dairy business is an investment in both the present and the future. New and experienced managers are invited to participate in this workshop where we will:

-Explore risks and management strategies associated with production, financial, and human resources.

-Develop a greater understanding of financial records, analysis, and bench-marking.

-Explore options for managing costs.

-Calculate your cost of production.

The workshop is limited to 25 participants to allow for lively discussion of how management theory is practically applied to both day-to-day and long range dairy farm management. Interested participants will also have an opportunity to complete an intensive analysis of their dairy business following the workshop. The registration form will be posted at http://dairy.osu.edu/. For additional information, contact Dianne Shoemaker at shoemaker.3@osu.edu.

2008 Farm Bill Implication and Decisions

Speakers include:

Dr. Carl Zulauf, Professor of Agriculture Economics, The Ohio State University

The 2008 Farm Bill has given producers the choice of a traditional farm program suite or a new ACRE farm program suite. This presentation will discuss the new ACRE revenue program and important questions that producers need to consider as they make this choice in today’s highly volatile market environment.

Robert Moore, Wright Law Company, LPA

The 2008 Farm Bill made several significant changes to Farm Service Agency Programs and in particular to payment limitation rules. This presentation will discuss these changes and how best to ensure compliance with the FSA rules through tax analysis, business structuring, and farm operation.

3/18/2009 – 9:00 a.m. to 12:00 p.m. – The Lighthouse, 10055 US Rt. 224 W., Findlay, OH 45840

3/19/2008 – 1:00 p.m. to 4:00 p.m. – Knights of Columbus, 8440 State Route 47, Versailles, OH 45380

3/23/2009 – 9:00 a.m. to 12:00 p.m. – All Occasions Catering 6989 Waldo-Delaware Road, Waldo, OH 43356

3/23/2009 – 6:00 p.m. to 9:00 p.m. – Muskingum County Welcome Center, 205 N. Fifth Street, Zanesville, OH 43701

3/24/2009 – 9:00 a.m. to 12:00 p.m. – Ross County Fairgrounds, 644 Allen Ave., Chillicothe, OH 45601

3/26/2009 – 1:30 p.m. to 4:30 p.m. – Fisher Auditorium, 1680 Madison Ave., Wooster, OH 44691

These meeting dates/times are fairly secure but not 100% confirmed and to look for more information in the near future.

2009 Ohio Crop Enterprise Budget Updates

Department of Agricultural, Environmental, and Development Economics

Newly updated Enterprise Budgets for 2009 have been completed and posted to the Farm Management Website of the Department of Agricultural, Environmental and Development Economics. Updated Enterprise Budgets can be viewed and downloaded from the following website:


Recent changes in fertilizer costs and crop prices have changed the profitability outlook for field crops in Ohio.  Enterprise Budgets updated for 2009 include:

Corn-Conservation Tillage, N Source-NH3;

Corn-Conservation Tillage, N Source-UAN;

Corn-No-Till; N Source – UAN:

Soybeans-No-Till (Roundup Ready);

Wheat-Conservation Tillage, (Grain & Straw);

Wheat-No-Till, (Grain and Straw);

Organic Corn

OSU Extension Enterprise Budgets are compiled on downloadable Excel Spreadsheets that contain formulas for ease of use. Users can input their own production and price levels to calculate their own numbers. These Enterprise Budgets have a new look with color coded cells that will enable users to plug in numbers to easily calculate bottoms lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. We will be updating these Enterprise Budgets periodically during the year as large changes occur in price or costs. Budgets will include a date in the upper right hand corner of the front page indicating when the last update occurred.

2008 Enterprise Budgets are available in Excel and PDF format on the OSU Farm Management Budget Website (http://aede.osu.edu/Programs/FarmManagement/Budgets/):


Corn – Conservation Tillage (NH3, UAN, and Urea Nitrogen sources)

Soybeans – Roundup Ready, No-till

Wheat – Conservation Tillage, (Grain and Straw)

Alfalfa Hay – Spring Seeding

Grass Hay – Large Bale System

Corn Silage – Large scale, Self-Propelled Machine Harvested

Corn Silage – Small scale, Pull-Behind Machine Harvested

Retail Sweet Corn – Conservation Tillage, Hand Harvested

Wholesale Sweet Corn – Conservation Tillage, Machine Harvested

Large-Scale Popcorn – Conservation Tillage


Slaughter Steer – Days on Feed: 232 & Days on Feed: 250

Slaughter Yearling Steer – Days on Feed: 182 & Days on Feed: 190

Slaughter Heifer – Days on Feed 220

Cow-Calf – Spring Calving

Ewe and Lamb – Winter Lambing

Dairy Cow and Replacement – Large Breed

Thinking Like a CFO

In farm businesses, managers have to be both the general manager and the production manager. Since general managers are responsible for the overall financial health of the business, they need to focus on tracking those things in the business that lead to success – just as the Chief Financial Officer of a large corporation. There are three key financial performance measures for the CFO.

The first is profitability. Is the business profitable? Return on Assets (ROA) and Return on Equity (ROE) will be the most common measures to use. ROA measures returns to all farm capital. Farm capital excludes all of the farm owner’s personal assets. Typically, ROA will average above 9 percent on the best-managed farms. ROE measures the rate of return on a farmer’s own equity capital (net worth). From this perspective, the investment in a farm is just another asset in a farmer’s investment portfolio. ROE is an indicator of the performance of the debt capital component of a farm’s capital structure. ROE should be greater than ROA on a farm where debt capital is being used productively. Profit margin is the margin on sales available to compensate debt and equity capital. Asset turnover measures the dollars of gross sales or income generated each year ratioed to the total dollars invested as assets. Leverage refers to the amount of debt in the business.

Size is the second performance area. Is the business big enough? A couple key measures are the breakeven volume – that point at which enough revenue has been generated to cover costs. Viability is another aspect to consider. First, do returns from the business provide enough income to support the living expenses of the operators? Second, is the production of the business high enough to overcome market barriers to access? An example of this would a dairy farm in which the dairy cannot sell its high quality milk to the processor unless they are able to meet a certain minimum volume requirement.

The third area is growth. Can, and should, the business grow? Part of this is answered by the size discussion. The rest depends on the managerial capacity of the manager and the organization, and the availability of financial resources. As a business grows the leader of the business must acquire the skills of a general manager, and, at some point, they need to put down their production manager hat. A business can grow only with equity or debt based capital. And the amount of debt available depends on the equity. The rate of equity accumulation influences the growth rate. Equity can be accumulated only by making money (profitability) and saving money (retained earnings).

Framing Your Financial Picture is an OSU Extension program that explores these performance areas and helps farms measure them on their farm. This program will be held February 17, 2009 at 7:00 PM at Northwest State Community College, near Archbold, OH. Registration material can be found at http://defiance.osu.edu

Purdue Extension, Strategic Business Planning for Commercial Producers, was used in the development of this article with additional resources available at: http://www.agecon.purdue.edu/extension/sbpcp/