tax shelter purposes is made more attractive by the 

 special treatment given to farms under the tax laws. 

 This includes more freedom in the use of the cash method 

 of accounting and the direct expensing of items that 

 would be depreciated over a period of years in a nonfarm 

 business. 



At the close of her remarks. Representative 

 Holliday stated that LC 12 would generate $4.4 million 

 in additional tax collections, based upon a proposed 

 graduated cap on farm losses similar to one established 

 in the state of Wisconsin. 



In its consideration of LC 12, the Subcommittee 

 heard testimony from concerned citizens, which included 

 the following: 



(1) Dr. Myles Watts, Chairman, Department of 

 Agricultural Economics and Economics, Montana 

 State University, outlined the tax benefits 

 for investors who do not plan to retain 

 ownership of land converted for use in 

 farming. He concluded that the tax laws have 

 a direct impact on the investment strategies 

 of individuals who realize the advantages of 

 investing in farming operations. Dr. Watts 

 said that the federal tax provisions, which 

 have been adopted by the state, encourage 

 external investors to become more involved in 

 agriculture. 



(2) Randy Johnson, Montana Grain Growers 

 Association, stated that the bill could 

 adversely affect a great number of people in 

 agriculture: (1) the farmer who has had 



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