Client Advisory Newsletter - Spring 2008 - Vol. 14

Becoming a Certified Livestock Manager

Tony Seegers

Manure, it can be a very valuable commodity to many farmers. It can also be a lucrative business for those who buy, sell or land apply manure. However, annually buying, selling, transporting or land applying manure can require a livestock manager certification by the Ohio Department of Agriculture.

Certified Livestock Managers, or “CLMs”, are regulated by the Ohio Department of Agriculture pursuant to Ohio Revised Code 903.07 and Ohio Administrative Code 901:10-1-06. Ohio Administrative Code 901:10-1-06 requires anyone who is a livestock manure broker who annually buys, sells, or land applies more than four thousand five hundred dry tons of manure or more than twenty-five million gallons of liquid manure to be a CLM. Ohio Administrative Code 901:10-1-06 also requires any livestock manure applicator who annually land applies or transports more than four thousand five hundred dry tons of manure or more than twenty-five million gallons of liquid manure to be a CLM.

CLM certification is a fairly straightforward process. The Ohio Department of Agriculture conducts training at its Reynoldsburg headquarters. The most recent training occurred on February 12 and 13. Receiving a CLM through the Ohio Department of Agriculture requires the applicant to attend three “core” training sessions. The Feb. 12 and 13 “core” training sessions were:

• Environmental Rules,
• On-Farm Nutrient Balance, and
• Manure Storage and Handling.

The applicant also has to attend three “elective” sessions. Applicants attending the Feb. 12 and 13 training could have chosen three of the following offered “elective” topics:

• the Role of Animal Agriculture Environmental Awareness,
• Odor Awareness and Control, Mortality Management,
• Emergency Action Plans,
• Insect and Rodent Control,
• Human Health Risks Associated with Animal Agriculture,
• Good Neighbor Relations, and
• Biosecurity

To complete the process, the applicant must complete the CLM application and submit a $30 fee to the Ohio Department of Agriculture.

Those desiring to become CLMs can pursue an alternative path to receiving certification besides the training from the Ohio Department of Agriculture as outlined above. To accomplish this, the applicant must demonstrate knowledge of: the calculation of nutrient values in manure; devising and implementing a plan for the land application of manure; removing manure from a manure storage or treatment facility; and the best management practices for disposing of mortality and manure management (the latter also includes practices that control odor and protect the environment). Applicants also need to demonstrate knowledge of how to devise and implement a manure management plan and an insect and rodent control plan as well as an understanding of the laws and rules relating to animal feeding facilities. Finally, applicants have to pursue one of two options to complete the alternative path to CLM status in addition to those set forth previously in this paragraph. The first option is completion of the training provided in the “certified crop advisor” program conducted by the “American Society of Agronomy” as well as passing the associated examination. The second option is completion of the training and certification of the United States Department of Agriculture Natural Resource Conservation Service for certified planners preparing comprehensive nutrient management plans.

Pursuant to Ohio Administrative Code 901:10-1-06, CLMs who are livestock manure brokers or livestock manure applicators have a duty to maintain an operating record on forms provided by the Ohio Department of Agriculture or on forms approved by the Director of the Ohio Department of Agriculture. These operating records are required to be retained for at least five years and be made available to the Director upon request. The operating records shall record and document the following information for land application of manure:

• List or otherwise describe those acres of land in the operating record for land application of manure, whether the land is owned or leased. In the alternative, use of a distribution and utilization plan should be recorded in the operating record.
• When liquid manure is applied to a land application site with subsurface drains, document the periodic observations of the drain outlets for liquid manure flow during and after application in the operating record.
• When liquid manure is applied to a land application site with subsurface drain, document the use of drain outlet plugs or other devices in the operating record.
• Date, rate, quantity and method of application of the nutrient, and/or form and source of manure, commercial fertilizer and/or other organic by-products.
• Total amount of nitrogen and phosphorus actually applied to each field, including documentation of calculations for the total amount applied.
• Condition of soil at the time of application including, but not limited to, available water capacity and evidence of soil cracks and related information on soil conditions.
• Temperature, including general weather conditions at time of application and for twenty-four hours prior to and following application.

While there is more information that can be given regarding CLMs, it will have to wait ‘til another day and another column. Best of luck to those who seek CLM status.

The Economic Stimulus Act of 2008

Kay Hafer
David Miller

There has been a lot of information in the news lately regarding the Economic Stimulus Payments that the IRS will begin sending out in May. What follows is some basic information about the Payments and some questions and answers that have been posted on the IRS website. For more information go to www.irs.gov and click on Rebate Questions.

Basic information: The basic amount of the payment is $300 - $600 per single taxpayer and $600 - $1200 for a married couple filing jointly. Eligible taxpayers with children under the age of 17 will receive an additional $300 for each qualifying child. Phase out of the payment begins at an AGI of $75,000 for single individuals and $150,000 for married couples filing jointly. The basic payment is phased out completely at an AGI of $87,000 for single taxpayers and $174,000 for married taxpayers filing jointly.

Is the Stimulus Payment taxable? No, you will not owe tax on the payment and the payment will not reduce your 2008 refund or increase the amount of tax you owe in 2008.

What income is not qualifying income for the Stimulus Payment? Rental income reported on Schedule E and not subject to self-employment tax is not qualifying income for purposes of the Payment. Interest, dividends, capital gains and pension income from employers is not qualifying income for purposes of the Economic Stimulus Payment.

What if my tax situation is different in 2008 than in 2007? If you did not qualify for a payment in 2007 or received a reduced amount in 2007, there may be a possibility of qualifying for a benefit in the 2008 tax year. There will be a worksheet in 2008 to help in determining your situation.

There is a balance due on my 2007 return but the amount owed is less than my expected Stimulus Payment. Can I wait to pay the balance due and simply let my Payment cover it? You should file your 2007 return and pay the entire balance due by April 15. If you wait for the Stimulus Payment to offset the balance due, penalties and interest will accrue between April 15 and the date the balance is paid, even if it is covered by the Payment.

Are there business provisions associated with the Economic Stimulus Act of 2008? Yes, the maximum section 179 deduction for qualified property is increased to $250,000 for tax years that begin in 2008 and an additional 50% first year depreciation is available for qualifying property acquired and placed in service during 2008 with a recovery period of 20 year or less.

Do farm buildings qualify for the 50% depreciation deduction? To qualify for this deduction, the property must have a recovery period of 20 years or less. Farm buildings will qualify since they have a general depreciation recovery period of 20 years.

Kelly’s Corner

Kelly Moore

Question: My husband and I are in the process of doing our estate planning. There are so many important decisions to be made that I would like to include my family in our discussions and decision making process. In your experience, is this wise to do or is it better to make the decisions privately so that no conflict arises now?

You have expressed the number one reason why individuals postpone completing their estate planning documents. The decisions involved in completing these documents are complex and extremely important and many people give up in frustration before they complete the process.

So, what are we really doing when we create a Will, a Trust, or a Power of Attorney? We are making sure that people we trust and love are taking care of us and our possessions so that when the time comes, those people can share in our life’s work. In some instances, we are choosing who will take care of our children if we aren’t around to do this. (Could there be any harder of a question?) We are in essence taking the proper steps to take care of our family. Just like we do everyday that we are alive. Therefore, I think the process of deciding who does what and who gets what when you are gone, should be better termed as a type of “Family Planning.” The process should be as common as other types of family styled planning such as succession planning, college planning, and retirement planning.

My suggestion to you is to include your family and loved ones in this type of planning. Call a family meeting, sit around the kitchen table, go have dinner with your friends whom you are about to ask to become your child’s guardian, ask the hard questions, talk about different scenarios and “what ifs.” Let them know your reasons as to why you have made certain decisions or ask for their input and help. Isn’t it better for them to be able to ask you now and know the answer, rather than to speculate after you are gone? Talk about your desires and wishes when it comes to health care. Does your husband know your wishes if you were to become permanently unconscious? Do your children know what to do for you to celebrate your passing? Do they know where you keep your important papers, or who your attorney is, or where all your accounts are located? What happens if there is a pending divorce of one of the family members? How is this going to be handled? Not only will you be asking the hard questions, keep in mind that you will also need to be prepared to provide the tough answers. You may have to explain why one child is not being included in a certain distribution or why you feel that a certain person is better suited to become guardian of your children than someone else. If you have a difficult situation within your family, chances are that it needs to be addressed in one way or another and this is a perfect opportunity to do so.

This is also an excellent time for all family members to consider planning of their own. Often families can be so intertwined that estate planning for mom and dad isn’t enough to protect the assets that everyone is working so hard for. I personally take great pride and derive a sense of accomplishment when we have mom and dad, son and wife, daughter and husband, all around the table discussing their estate plans/ family plans, or succession planning for their business. More often than not, you are able to witness the growth that occurs among the families involved. Having a united plan can make a family feel powerful and more prepared to weather the rough times.

In this day and age, we develop plans to work on our weight and health. We develop plans to save more money. We develop plans to improve our homes. Why not do some planning that increases family communication and makes the inevitable seem less uncontrollable. Make a commitment to see the process through. I personally know that it is extremely hard to carry out this task. You know the saying, “the cobbler’s children need shoes.” But isn’t it easier to broach that hard topic now and find the answers together rather than wait until the only person who can provide the answer is gone?

You are on the right track, you are thinking about the decisions that need to be made, now do the planning that will enable your loved ones and loved things to be taken care of as best as you can. You may be taking care of events that will happen in the future but in the process take the opportunity to take care of relationships that are happening right now.

I welcome your questions or comments: kmoore@wright-law.net

Retirement Planning

Paul L. Wright

Retirement planning is a challenge. I often say that the ideal retirement is to have the flexibility to do what you want. Retirement can enable us to volunteer for worthwhile projects, travel, enjoy our hobbies, enjoy our families and if you choose, continue to work.

As we work with several of you, we find monies for retirement coming from several different sources. Those sources include land rent or sale, machinery rent or sale, income from continuing to work, income from business entities which were nurtured during the working career, income from bank accounts and stocks, income from qualified retirement plans and social security benefits. Most people enjoying retirement have several income sources as a result of their hard work and planning. As you plan for retirement, be sure to have an idea of the sources of income, and how much retirement income will be available. It is true that nearing retirement encourages us to get investments in more stable, less volatile, investments.

Land is an asset most farmers aspired to own during their lifetime, and that land can be rented to provide a source of retirement income. Upon retirement, the land can be rented to a child or other family member or another farmer in the community. Another option would be to sell the real estate if you are not interested in renting.

Farm machinery (and possibly breeding livestock) are assets acquired during the farming years. Like land, these assets can be rented most likely to a family member taking over the business, or sold to provide retirement funds.

Retired individuals continuing to work is rather common. Continuing to work not only provides needed retirement income, it also may give retirees satisfaction and something meaningful to do and possibly assist in transferring the business you have nurtured.

LLCs, partnerships or corporations formed during the working career can also provide retirement income. With proper planning and documents, a business entity can provide continuing distributions to ownership without having to sell the entity. This plan works well if a family member or business partner has the desire to take over the management of the business and someday acquire the ownership. If not, then the business may be sold and the income from the sale helps to fund retirement.

We see several families who have certificates of deposit, savings accounts, stock and bonds as part of their retirement portfolio. These are rather liquid sources of retirement money providing funds from the income generated or by gradually making withdrawals from other retirement funds.

Qualified retirement accounts are a favored source of retirement funds. These are funds from traditional IRAs, Roth IRAs, 401 (k) and 403 (b) accounts. In our experience many people wait until age 70 or 70 ½ to start the withdrawal from such accounts and often take only the minimum withdrawal required by law. A Roth IRA has no requirement to start to withdraw funds at 70 ½ as there is with the other qualified accounts.

Other sources of qualified retirement accounts are STRS, PERS, SERS or similar accounts. These are excellent sources for funding retirement if someone was fortunate to have worked for a school system or a public agency during their working years.

There are retirement benefits for those who have 40 quarters or more in the Social Security System. While the benefits may not be great, they do provide some retirement income. With the concerns about the future of the Social Security system, it is becoming increasingly important to plan on securing our own retirements.

Planning for retirement should be an objective for all. It is never too early to start. As retirement approaches but is still a couple of years off, it is important to fine tune planning. There are many factors to consider as retirement sources are evaluated not the least of which are the various tax laws.

It is our pleasure to work with several families as they plan financially for retirement, as they fine tune their tapping into their funds and investments, and as tax issues are analyzed. We often have the opportunity to work in conjunction with accountants and financial advisors as this planning is done. We would be happy to be of assistance to you in this planning.

Twenty Years of Practicing Law

Paul L. Wright

We are celebrating the 20th year of practicing law. In February of 1988, Paul opened a law office in his home. That was after his retirement from The Ohio State University. Today, with 14 employees and approximately 3000 clients, we consider ourselves very fortunate.

Every day the practice of law brings new issues and new challenges. This is a part of the excitement of the law business. No two appointments, no two phone calls and no two issues are the same.

We appreciate our opportunity to work with each of you. Our impossible desire would be to have each of you in a room to join in one big 20th year celebration. Maybe we can do that in spirit by extending our thoughts and good wishes to each other.

We have crossed another milestone in our office. Paul has stepped down as President and CEO. Robert Moore is now responsible for this leadership role. Paul is now Chairman of the Board and continues to practice law. Letting go of the leadership responsibilities can only be understood by those who have had this experience. As may be expected, Paul is experiencing the many challenges that come with this change. The great thing is that the transition in leadership has been smooth and efficient and all is going well.

Since our last newsletter we have had some personnel changes. We welcome Tony Seegers as a new attorney heading up our litigation efforts. You can read more about Tony in another section of this Newsletter.

David Pennington has left our employment and is now working with the Ohio Farm Bureau. David remains in an “of counsel” position with us and we continue to call on his expertise.

Kimberly Cutler has left us to establish her own law practice. We wish Kim the very best in her new role.

As always, we welcome your input as you view our business from an understandably different perspective. If you have any comments, questions, or suggestions please share those thoughts with us.