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PIONEER POINTERS 



Tax Planning — a Must! 



Although operating seasons may overlap some- 

 what from one calendar year to the next, don't 

 forget that your 1998 operating season — from a fi- 

 nancial standpoint — ends on December 31. 1998 is 

 shaping up to be a decent year for the Green Indus- 

 try. That's why you should start tax planning as soon 

 as possible, rather than waiting until the last minute. 



A common comment from self-employed green- 

 house owners who do not review their tax situa- 

 tions early is, "Why do I owe so much income tax, 

 even though if I drained my checkbook before 

 year's end?" The three most common reasons: 



• Paying down operating or term debt before 

 year's end. Only interest is a deductible expense, 

 not the principal portion. 



• Paying cash for large capital expenditures. Al- 

 though some capital purchases (equipment, for ex- 

 ample) are depreciable and qualify for section 179 

 depreciation, some do not. Land is totally non-de- 

 preciable and can really bite you if you pay cash 

 or a sizeable down payment for a land purchase. 



Also, think twice about buying that vehicle and 

 putting down a sizeable down payment. It may be 

 difficult to classify it as entirely for business use. 

 It may therefore be only partially depreciable and/ 

 or subject to luxury car limitations which cap the 

 amount of depreciation you can take. 

 • Drawing from the business to cover living ex- 

 penses. If you've been able to pay college education 

 bills out of personal draws from the business while 

 still covering expenses, it simply means that you are 

 making decent profits. Before spending the rest of 

 the cash in the checkbook on personal items, remem- 

 ber that Uncle Sam is entitled to a slice and set 

 some aside. Are you paying cash for that $2,500 trip 

 to Orlando over the holidays? Consider putting it on 

 your credit card and paying it when the bill comes 

 due in January. Use the $2500 to prepay an operat- 

 ing expense before December 31. (SW) 



For more tax information, contact the Bedford of- 

 fice of First Pioneer Farm. Credit, 2 Constitution 

 Drive, at 1-800-82^-32^2. 



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