Continue to keep separate records of the gain from capital items such as timber, breeding stock, machinery, and land. The maximum tax rate for gains on these assets qualifying as long-term capital gains is 20 percent or less. Consider trading rather than selling capital gain items - especially real estate.
Taxes can be quite dramatic on assets that have a low basis.
But the law still allows non-taxable exchanges, and a trade could be advantageous in certain real estate transactions. Buy extra feed, fertilizer, and chemicals in high-income years , to even out income and save taxes. The amount of deductions you can take for items you buy in 1999 for use in 2000 is limited. In some case the deductible amount is limited to 50 percent of the total expenses that were reported on Schedule F that were actually used in 1999. Some expenses such as farm rent, insurance, and interest payments are not deductible when prepaid.