SB 7 - This act creates programs for beginning farmers.
BEGINNING FARMER INCOME TAX DEDUCTIONS (Sections 143.2025-143.2045) - This act creates three new tax deduction programs to assist beginning farmers. To qualify as a beginning farmer, a person shall be a Missouri resident, have not operated a farm or ranch for more than 10 years, nor own a farm or ranch greater than 30% of the average size farm in the county as determined by the most current Census of Agriculture, and materially participate in the farming or ranching operation.
The agricultural assets transfer agreement deduction authorizes owners of agricultural assets to be issued an income tax deduction for leasing their agricultural land, property, crops, or livestock to beginning farmers. The taxpayer must enter into a written agreement with a beginning farmer for a duration of at least 7 years. For agreements based on a cash basis, the deduction will be equal to 50% of the gross amount paid under the agreement each tax year. For agreements based on a commodity share basis, the deduction will be equal to 50% of the amount paid to the taxpayer from crops or livestock sold under the agreement.
The custom farming contract deduction authorizes taxpayers that hire beginning farmers under a custom farming contract to be issued an income tax deduction. The contract must provide for production of crops or livestock principally located on the taxpayer's land in exchange for a set fee or rate. The contract must be in writing, for a term of no more than a year, and for a total payment of at least $1,000. The deduction will be equal to 50% of the gross amount paid to the beginning farmer.
No taxpayer may be issued an agricultural assets transfer agreement deduction or custom farming contract deduction in excess of $400,000 in a given tax year. The total amount of such deductions that may be issued under the two programs in a fiscal year is $100 million, with 2/3 allocated for the agricultural assets transfer deduction and 1/3 allocated for the custom farming contract deduction. Unused portions of the deductions may be carried forward for up to 3 tax years. If a taxpayer is at fault for terminating an agricultural assets transfer agreement or a custom farming contract, the taxpayer shall pay back the amount of any deduction claimed under the program.
This act also creates an individual tax deduction equal to 25% of the income realized from the sale of agricultural or horticultural property sold to a beginning farmer, to the extent that such amount is included in federal adjusted gross income when determining such individual's Missouri adjusted gross income. If the agricultural or horticultural property ceases to be classified as such or ceases to be owned by a beginning farmer within 7 years of being originally sold, the original buyer shall include a prorated amount of the deduction previously received by the seller as income in the year the land ceases to qualify.
No beginning farmer tax deductions may be issued to a taxpayer if the taxpayer and the beginning farmer have a certain familial, fiduciary, or business relationship.
BEGINNING FARMER CENTER (Section 262.599) - This act establishes a Beginning Farmer Center as part of the University of Missouri agriculture and natural resources extension program to assist individuals in beginning farming operations. On or before January 1 of each year, the Beginning Farmer Center shall submit a report to the General Assembly that includes recommendations for methods by which more individuals may be encouraged to enter agriculture.
This act is identical to SCS/SB 177 (2015) and similar to HB 387 (2015).