Who we work with
We work with established farming and ranching operations doing $1M or more in annual revenue: row crop and wheat farms, cow-calf and stocker operations, and family operations that do both.
You’re managing land, equipment, livestock, and family all at once. Prices, weather, and input costs are out of your control, but how and when your income is taxed is something you can plan. Many farm and ranch families also want to keep the operation in the family for the long run.
- Crop farmsWheat, row crops, and hay operations with big equipment and seasonal cash flow.
- Cattle and livestockCow-calf, stocker, and feeder operations with breeding stock and market sales.
- Family operationsMultiple generations, multiple entities, and land held in different names.
The tax challenges farmers and ranchers face
The tax code has rules written just for agriculture. Using them well takes planning before the year closes.
Income that swings
Commodity prices and yields change your income from year to year. Farm income averaging can spread a high year’s income across prior years’ tax brackets, and the timing of sales can smooth things further.
Prepaid expenses and timing
Farmers on the cash method can often deduct prepaid feed, seed, and fertilizer, within limits. Deferring grain sales or crop insurance proceeds may also be possible in some situations.
Equipment and depreciation
Tractors, combines, and trucks are expensive. Section 179 and bonus depreciation can write them off quickly, but trade-ins and sales bring depreciation recapture, so purchases need a plan.
Livestock sales
Raised livestock, purchased livestock, and breeding stock are taxed differently. Special rules may let you defer gain on livestock sold early because of drought or other weather conditions.
Land and conservation
Soil and water conservation costs, land improvements, and conservation programs each have their own tax treatment. Land sales and easements deserve planning well before closing.
Succession and family
Passing an operation to the next generation touches income, gift, and estate tax. Starting early gives you more options and fewer surprises.
Strategies that often fit farms and ranches
Every operation is different. These are strategies we often review with agriculture clients.
- Section 179 and bonus depreciationPlanning when equipment is placed in service can make a big difference in a strong year.
- Heavy vehicles and bonus depreciationHeavy-duty farm and ranch pickups are often over the 6,000-lb threshold this strategy depends on.
- Hiring your childrenKids who do real work on the farm can be paid for it, shifting income to them at lower tax rates.
- The kids’ Roth IRAYour children’s farm wages can fund Roth IRAs that grow tax-free for decades.
- Own the land, rent it to your operationHolding land in its own entity and leasing it to the operation can add protection and help with succession planning.
- The Oklahoma PTE electionOperations run through a partnership or S corp may be able to turn state income tax into a federal business deduction.
- Cash balance planOwners 45 and up with steady profits may be able to put large deductible amounts toward retirement.
Advanced strategies for higher-income owners
Larger operations, valuable land, and passing the farm to the next generation call for more advanced planning.
- Lifetime gifts and SLATsMove land and future growth out of your estate under the $15 million per person exemption.
- Family limited partnershipGift interests in the land and operation to the next generation, often at a discount, while you keep control.
- The 1031 exchangeTrade farmland or other real estate for replacement land and defer the gain.
- Charitable remainder trustSell highly appreciated land or other assets inside a trust with no tax at the sale and take income for life.
- The 3.8% net investment income taxCash rent and other passive farm income can be subject to the 3.8% tax at higher incomes. Planning can help.
- Intangible drilling costsIf you own working interests in wells, on your land or elsewhere, drilling costs can bring large deductions.
Everything under one roof
One monthly Tax Plan, starting at $475 per month and priced by complexity, built for operations with $1M or more in annual revenue. One team for your taxes, books, and filings.
See all services- Year-round tax planningWe project your year before harvest and before you sell, so you can decide on timing with the numbers in hand.
- Business and personal tax returnsYour farm or ranch return and your personal return, included in your plan.
- BookkeepingMonthly books organized around your operation, so you can see how each enterprise is performing.
- Payroll, sales tax, and 1099sPayroll for family and hired help, 1099s for custom work and contractors, and sales tax where it applies.
- Quarterly estimated paymentsCalculated for you, with personal and business amounts shown separately, including the special payment rules that can apply to farmers.
- IRS audit protection and representationWe can represent you before the IRS.
- CFO-style reportingCash flow and profit reporting to help you plan purchases, land deals, and lender conversations.
- Direct access to your advisorCall before you sell the calves or sign for the new combine.
An illustrative example: new equipment in a strong year
Picture a family grain and cattle operation that has a strong year and buys a new combine and planter for $600,000, placed in service in 2026. New farm machinery is 5-year property. The owners are in the 32% federal bracket.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Regular depreciation | 100% bonus depreciation | |
|---|---|---|
| Year-one deduction | $120,000 (20% in year one) | $600,000 |
| Extra year-one deduction | $480,000 | |
| Extra federal income tax saved this year (32%) | about $153,600 |
Bonus depreciation moves about $480,000 of deductions into this year, lowering federal income tax by about $153,600 in the year the income is high. The Oklahoma effect depends on whether Oklahoma follows federal bonus depreciation for the year, which we confirm before counting on it.
Farm income swings. A deduction is worth the most in a high-income year and can be partly wasted in a low one. You can elect out of bonus depreciation for a class of property or use Section 179 for a chosen amount, so we size the write-off to the year. Used machinery is generally 7-year property, and equipment sold later brings recapture as ordinary income.
Illustrative example. The operation and figures above are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes new machinery acquired after January 19, 2025, the half-year convention and 200% declining balance for regular depreciation, and that the owners can use the full deduction in the 32% bracket. This page is educational and is not tax advice for your situation.
Questions farmers and ranchers ask us
We had a great year. What can we do before it ends?
Often quite a bit: timing equipment purchases, prepaying inputs within the limits, deciding when to sell grain or livestock, and looking at farm income averaging. The earlier we look, the more options you have.
We sold cattle early because of drought. Is there any tax relief?
There may be. Special rules can let you defer the extra income from weather-related livestock sales, depending on the type of livestock and whether your area qualifies. We’ll review your sales and records with you.
Can you help us plan for passing the farm to our kids?
Yes. We look at how land, equipment, and the operation are owned today and help you plan the tax side of a transition over time, working alongside your attorney.
Do you work with operations outside Oklahoma?
Yes. We’re based in Norman and fully virtual, and we work with farmers and ranchers in Oklahoma and beyond.
Can I do a 1031 exchange on farmland?
Yes. Farmland, pasture, and other real estate held for business or investment can be exchanged for other real estate. Equipment and livestock no longer qualify. The timing rules are strict: 45 days to identify replacement property and 180 days to close.
Is cash rent from my land subject to self-employment tax?
Cash rent is generally not subject to self-employment tax. Crop-share or other arrangements where you materially participate in production can be. How the lease is written matters, so we review it with you.
Does Oklahoma have an estate tax?
No. Oklahoma has no estate or inheritance tax. The federal estate tax exemption is $15 million per person starting in 2026, so planning for farm families usually focuses on federal estate tax, income tax basis for the next generation, and keeping the operation running.
Watch the stories
One-minute stories about owners like you. Illustrative story; the people are fictional and are not clients. See all story videos.
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