Yankee Farm Credit Approves Special Cash Patronage

Yankee Farm Credit Approves Special Cash Patronage

Members to receive $1.8 million mid-year patronage

Williston, Vermont (August 24, 2018) The Yankee Farm Credit Board of Directors recently approved the distribution of a mid-year patronage dividend of $1.8 million to their more than 1,400 members who are involved in farming and forestry. This distribution equals a return of approximately 30 bps of the average daily balance on loans.

This special patronage payment is possible because 2018 net income is significantly over budget for the first half of 2018. Several factors contributed to this positive performance in net income, including; an increased focus on portfolio diversification, a steadfast focus on cost controls and one-time payments received from partner organizations. We anticipate the payment will be distributed in the fourth quarter of 2018. This payment is separate from the $6.3 million patronage dividend that was paid in March 2018, which was based on 2017 earnings. The board will review net income at year-end with the anticipation that we will pay normal patronage in addition to this special patronage payment.

Our board's philosophy is that funds, which are not required to safely operate or capitalize our cooperative, should be returned to members. The special, one-time dividend reflects Yankee Farm Credit’s strong financial position, combined with our understanding and appreciation of the economic challenges faced by many of our members. Yankee's strong earnings allow us to continue to grow sustainably, while returning a portion of those earnings to our owner members.

"Kudos go to Yankee's management and staff for their hard work and wise management of our members’ funds, especially during the challenging times of Yankee's IT conversion,” said Paul Franklin, Chairperson of the Board.  “Their hard work resulted in achieving higher returns than necessary to meet Yankee's budgetary needs. Increased revenues combined with one time refunds allows the board to approve this distribution of funds to Yankee's members by a mid-year special patronage."

About Yankee

Yankee Farm Credit is a member-owned cooperative that provides loans and financial services to farmers and other rural customers. Yankee is an agricultural credit association (ACA) within the national Farm Credit System. Yankee serves all of Vermont, four counties in New Hampshire (Cheshire, Coos, Grafton and Sullivan) and two counties in New York (Clinton and Essex).

For more information about Yankee, visit the Association’s website at www.yankeefarmcredit.com. The complete quarterly report is available on the website.

Contact

Erika Quick
Marketing Coordinator
802-879-4700
equick@yankeefarmcredit.com

New Hampshire Ag Financiers-Recent Meeting Updates

-Katy Coombs, Loan Officer

On June 7th, I attended the third NH Ag Financiers (NHAF) meeting this year.  We had a representative from SCORE, a volunteer organization made up of retired business executives from major corporations, retired business owners, and subject matter experts that uses its expertise to mentor start-up and existing businesses.  It is a nationwide organization with over 10,000 volunteers.  There are 6 chapters in NH with 100 mentors. This is a free service for the life of the business with the mentors either acting as advisers in a more hands off role or physically getting into the business in one way or another and working with them to improve an identified area such as records, marketing, or human resources.  SCORE has recently partnered with the USDA to try to recruit both farm clients and farm volunteers.  NHAF has identified potential in working with this group to connect them with local farms.  Our next step is to attend a SCORE chapter meeting to talk about what each organization offers their market and how we can work together to best serve our farmers.

In the afternoon, I led a discussion on the dairy industry for the group and some guests.  We discussed the current state of the dairy industry. There was a lot of participation and interest in the discussion. Some good thoughts on possible ways to improve the situation included:

- State branding for products

- Creating new business models

- Comprehensible and accessible training

Major updates from the group were from FSA and UNH Extension. Jeff Holmes, the state director for FSA, discussed the new MPP enrollment and improvements to the program.  Payments should be starting to go out this week to those farms who signed up.  He also discussed the weather emergencies that have kept the FSA offices busy this year including the field damage from the storms from last October (which was covered with snow until recently), flooding and debris in fields and farms, and the confirmed tornado in Sullivan and Merrimack counties last month

Seth Wilner from the UNH Extension talked about the new focuses for Extension going forward.  Their three initiatives for the year are:

1. Benchmarking– farm financial health assessments and making data driven decisions.

2. Farm Transfer and succession planning – three year plans.

3. Women in agriculture – livestock production and business skills.

NHAF is a group that meets four times a year to discuss different ways we can work together to help NH agriculture, whether that means with financing, education, consulting, records, etc.  It is made up of agriculture professionals from around the state and we bring in guest speakers some times to educate us on a particular tool, industry, or area that will allow us to better help our farmers. Members of the group include Farm Credit East, FSA, Community Loan Fund, Land for Good, NH Ag Mediation, rural development, small business association, the NH Commissioner of Agriculture, and representatives from the congresswoman and senators offices.

For more information on the New Hampshire Ag Financiers group, you can email Yankee Farm Credit Loan Officer Katy Coombs at KCoombs@yankeefarmcredit.com

Annual Meeting Results

It was a busy April, here at Yankee. We held five annual meetings this year, starting on Monday April 9th, with a morning meeting in Chazy, NY then Middlebury, VT in the evening. Tuesday was in Quechee, VT, and we finishing up on Thursday, April 12th with a morning meeting in Newport, VT and the evening in St. Albans. We had an increase in overall attendance which was a welcome sight as 2017 was an eventful year for Yankee and there was much to communicate with members. Each meeting also offered members the opportunity to hear from director candidates, vote for directors in their region, hear from Brenda Frank, CEO and Paul Franklin, Board Chairperson about the state of the Association, and get introduced to a few current members of our FarmStart program,  an alternative to our traditional financing products, specifically designed to assist beginning farmers and cooperatives.

Voting concluded on Thursday evening at the St. Albans meeting. The ballots were counted and the results were announced before the meeting adjourned.

Elected to three year terms on the board of directors were:
Region 1-Craig Giroux
Region 2-Brad Maxwell
Region 3-David Folino

David Folino

Craig Giroux

Brad Maxwell

Congratulations to  Craig, Brad and David and thanks to Anne Lincoln, Mateo Kehler, Clifford Allard and Jane Clifford for participating in the elections as candidates.

Yankee CEO, Brenda Frank reflected on this year's meetings and the coming year.

"It was a tremendous support being able to talk with members over the week. Our team is dedicated to staying focused on the industries we serve while managing the many challenges of the coming year. The rising interest rate environment offers challenges for everyone at Yankee Farm Credit, but we stay committed to returning any additional profit to our members."

Paul Franklin, Board Chairperson commented on the importance of member support to the success of our Association.

"The board of directors is pleased to have such broad support and participation in the Association's annual meetings. The election process is so important to running this organization and we are pleased to welcome Craig and David to the board.

We appreciate your patience as Yankee's staff completes the conversion to new support programs. They offer new efficiencies and services, but also learning challenges and change for all of us. Make sure you look to the staff for any help you need with any of this or other lending issues.

We are proud to have had a successful year reflected in our patronage and look forward to continuing the year servicing our customers with a safe and strong Agricultural Credit Association."

Thank-you to the members that participated, and a special thanks to employees for organizing and running successful meetings. We welcome any feedback about annual meetings. If you have questions or comments, please let us know! You can email your thoughts to our Corporate Secretary, Jim Mills at jmills@yankeefarmcredit.com or call at 800-639-3053.

https://www.yankeefarmcredit.com/products-and-services/farm-start

Yankee Farm Credit Reports First Quarter Results for 2018

Net Earnings $3.9 Million

Williston, Vermont (May 10, 2018) - Yankee Farm Credit today announced first quarter financial results for 2018. Yankee is a farmer-owned credit cooperative serving Vermont and parts of New York and New Hampshire. Quarterly earnings were up from the prior year, and loan quality remained stable. The Association distributed nearly $6.3 million in patronage refunds to members during the quarter. Yankee’s overall level of capital remains strong.

Q1 Financial Results

Quarterly net income for Yankee was $3.9 million, an increase of $1.6 million from the same period in 2017. Net interest income increased 20 percent, from the same period in 2017, to $4.9 million. Noninterest income increased $470 thousand, primarily due to refunds received from the Farm Credit System Insurance Corporation. Noninterest expense decreased $22 thousand from the same period in 2017.

Loans held by the Association at March 31, 2018 were $500.1 million, down $11.9 million from year-end but $21.2 million higher than March 31, 2017. The loan portfolio continues to be concentrated in the dairy industry, with 48.3 percent of the loans invested in dairy businesses. The second largest concentration is timber, with 11.1 percent of the loan volume at quarter end, with maple being the third largest concentration with 10.4 percent.

Credit quality across Yankee’s loan portfolio remained stable during the quarter and well within the risk-bearing capacity of the Association. At quarter end, 1.3 percent of the Association loans were classified as nonperforming, up 0.4 percent from the end of 2017. There were no loan charge-offs or recoveries in the quarter. The Association’s permanent capital ratio at quarter end was 17.9 percent, down from 18.8 percent at the end of 2017.

The 2017 patronage refunds to members in the amount of nearly $6.3 million was paid 100% in cash on March 22, 2018.

About Yankee

Yankee Farm Credit is a member-owned cooperative that provides loans and financial services to farmers and other rural customers. Yankee is an agricultural credit association (ACA) within the national Farm Credit System. Yankee serves all of Vermont, four counties in New Hampshire (Cheshire, Coos, Grafton and Sullivan) and two counties in New York (Clinton and Essex). For more information about Yankee, visit the Association’s website at YankeeFarmCredit.com. The complete quarterly report is available on the website.

Contact

Pamela Simek
SVP/Chief Financial Officer
(802) 388-9390
PSimek@YankeeFarmCredit.com

Cost Control Considerations, Part 2: Budget, Plan, and Monitor

Cost control is a major driver of profitability in any business, let alone a dairy business. While cost control may be a recent topic of conversation in relation to where milk prices are presently, it really should be considered and focused on consistently in a well-run business. The key to effective cost control is not necessarily cutting expenses, but rather spending dollars wisely. Over the next several posts, we will share a collection of advice geared toward considerations when aiming to lower your net cost of production. Last week we discussed the net cost of production and breakeven milk price, the starting point in managing cost control. This week we go over the usefulness of a budget.

 

Budget, plan, and monitor 

Creating an annual budget, reviewing, and updating it periodically can help identify trends early, make adjustments quickly, and plan accordingly. A budget is often compared to a road map that charts a course through the year or some other time period, identifying obstacles along the way. You anticipate what will be coming in as income and what will be going out as expenses, as well as any principal payments or capital replacement needs. It helps when making a plan to accomplish goals you may have, or to satisfy any needs that may arise.

 

When considering cost control, a budget helps to track expenses especially when compared to actual results. This can shine a light on areas that may need more attention. For example, perhaps you discover that insurance premiums have gone up significantly without any other material changes in the business. A call to your insurance agent can help to set things right again, or maybe it’s time to find a new insurer. Another example is bedding cost per cow is up significantly – is it a result of the supplier’s cost increasing or is usage increasing? There are many other examples.

 

A few other reasons to budget as you consider strategies for more effective cost control:

1. Evaluate performance of specific area
2. Employee management and/or engagement
3. Sharpen understanding of operations
4. Help meet goals
5. Facilitate discussions
6. Avoid surprises
7. Motivate to be creative/use resources more effectively 

“What use is a budget if I’m just going to blow it the next week with some big tractor repair?”

I sometimes hear this objection to creating a budget. Consider making your budget a work-in-progress, updating it when you have new and better information. You could update the budget and make plans for a big tractor repair, adjusting other aspects accordingly. Milk price forecast is another area that changes several times throughout the year – adjusting for these changes can help hone expectations.

 

In the next post, we will discuss several specific cost control strategies.


By: Joanna Lidback, Business Consultant
JLidback@YankeeFarmCredit.com

Cost Control Considerations: Part 1

Cost control is a major driver of profitability in any business, let alone a dairy business. While cost control may be a recent topic of conversation in relation to where milk prices are at present, it really should be considered and focused on consistently in a well-run business. The key to effective cost control is not necessarily cutting expenses, but rather spending dollars wisely. Over the next several posts, we will share a collection of advice geared toward considerations when aiming to lower your net cost of production.

Know your cost of production, your breakeven milk price, and the difference between them. 

The first step in knowing where you stand in dairy production economics is knowing your cost of production – but that’s not enough. Your cost of production takes into account operating expenses like, feed, labor, and overhead costs such as interest. It does not, however, include principal payments or capital replacement. And it may or may not include family living expenses. What’s more, sometimes analysts will net non-milk income out against variable expenses, so what you’re left with is a net cost of production – one that can easily be compared against a milk price forecast in order to get an idea of where profit or loss levels will be.

However, cost of production and net cost of production leaves out a very important element, particularly if you have any debt. What you really need to be aware of is how much cash is needed to fully fund the operation, including those non-deductible items like principal payments. Breakeven milk price starts with net cost of production, subtracts depreciation as it is a non-cash item, and adds principal payments. It’s called “breakeven” because it leaves you in an even position cash-wise – not in the negative nor in the positive. Again, comparing the actual milk price and its forecast will give you a good idea of what to expect.

Still, breakeven milk price leaves out capital replacement, which is needed to keep your operation running smoothly for the long term.

You may find that you are burning through cash reserves.

In some cases, you may find that you are “burning” through cash reserves – in some circles, this is known as the “burn rate”. More is going out than coming in. You and your banker may be interested in this number as it is a measure of negative cash flow and what will be required to fund operations until you are in positive cash flow again. This is accomplished by using cash reserves, liquidating unproductive assets, accessing new capital, or deferring principal payments.

Next week we will discuss the usefulness of a budget, or a road map when considering cost control.


By: Joanna Lidback
JLidback@YankeeFarmCredit.com

 

Tax Changes Affecting Individuals: Part 2

-Kristen Murray,  Financial Services Specialist

If you are a wage earner, by now you may have noticed a decrease in your Federal withholding and a corresponding increase in your net paycheck. This change is the result of newly published withholding charts that reflect reforms to the tax tables for years 2018-2025. Last week, I discussed major changes to credits and deductions that will affect the taxable income of individual taxpayers. The next step in the process of projecting your 2018 tax liability is to apply the new tax tables to your projected taxable income.

Below is a side-by-side comparison that serves as a simple example of the effects of the TCJA.

You will notice that this comparison includes income from a small number of sources. This is for simplicity of demonstration. One major source of income that is missing is business income. I specifically excluded this from the above example so that next week I can dedicate the majority of my post to the effects on business income and more specifically, the section 199A qualified business income (QBI) deduction. Until then, happy calculating and may the TCJA be ever in your favor.

For more information, email FinancialServices@yankeefarmcredit.com or call 1-800-370-3276.

Tax Changes Affecting Individuals: Part I

-Kristen Murray,  Financial Services Specialist

If you were following the publicity surrounding the Tax Cuts and Jobs Act (TCJA) prior to its enactment, I expect you heard mention a time or two that it was designed to provide, amongst other things, significant tax relief to middle income earners. So, if you are an individual classified as a middle income earner you are probably asking yourself, “will I benefit”? The answer, as with most things tax related is it depends. There are several factors that require consideration before an individual can determine whether the TCJA will prove adventagous for them. Such condisderations include but are not limited to eligible credits and deductions. What follows is a chart that reviews notable changes to many popular credits and deductions. Something to note, if you generally do not itemize, you may focus your review on the areas in grey.

AGI: Adjusted Gross Income

AMT: Alternative Minimum Tax

MAGI: Modified Adjusted Gross Income

Then and Now: 2017 to 2018
Deductions and Credits	2017 Single	2017 MFJ	2018 Single	2018 MFJ
Standard Deduction	$6,350.00*	$12,700.00*	$12,000.00*	$24,000.00*
Additional Standard Deduction over 65 years of age and/or blind	$1,550.00*	$1,250.00 ea.*	$1,600.00*	$1,300.00 ea.*
Personal Exemptions	$4,050.00**	$4,050.00**	$0.00	$0.00
Itemized Deductions - Medical Expenses	Excess of 7.5% AGI (tax reform retroactive change)	Excess of 7.5% AGI (tax reform retroactive change)	Subject to 7.5% AGI Returns to 10% for 2019	Subject to 7.5% AGI *Returns to 10% for 2019
Itemized Deductions - SALT (state/local property, state/local/foreign income and general sales tax)	Allowed subject to AMT phase-out rules	Allowed subject to AMT phase-out rules	Maximum deduction of $10,000.00, foreign income tax excluded, subject to AMT phase-out rules	Maximum deduction of $10,000.00, foreign income tax excluded, subject to AMT phase-out rules
Itemized Deduction - Mortgage Interest	Interest paid on maximum acquisition indebtedness of $500,000 (including home equity) subject to AMT rules	Interest paid on maximum acquisition indebtedness of $1 million (including home equity) subject to AMT rules	Home equity interest disallowed and maximum acquisition indebtedness reduced to $375,000 for post 12/31/2017 acquisitions, subject to AMT rules	Home equity interest disallowed and maximum acquisition indebtedness reduced to $750, 000 for post 12/31/2017 acquisitions, subject to AMT rules
Itemized Deduction - Miscellaneous subject to 2% AGI	Qualifying expenses allowed	Qualifying expenses allowed	Previously qualified expenses disallowed	Previously qualified expenses disallowed
Child Tax Credit	$1000/qualifying child, subject to income phase-out beginning at MAGI of $75,000	$1000/qualifying child, subject to income phase-out beginning at MAGI of $110,000	$2000/qualifying child, subject to income phase-out beginning at MAGI of $200,000	$2000/qualifying child, subject to income phase-out beginning at MAGI of $400,000
Refundable Portion of Child Tax Credit	Refundable up to $1,000, subject to earned income and other qualifying factors	Refundable up to $1,000, subject to earned income and other qualifying factors	Refundable up to $1,400, subject to earned income and other qualifying factors	Refundable up to $1,400, subject to earned income and other qualifying factors
* Not Subject to AGI Phase Out		** Subject to AGI Phase Out

Stayed tuned, as next Wednesday I will review the interaction between such changes and the 2018-2025 tax tables.  It is a lot of information to take in, and (borrowing a line from my Yankee colleague Dan Shepard), “you will require a seat but only use the edge”. Exciting stuff folks!

For more information, email FinancialServices@yankeefarmcredit.com

Tax Reform and Health Care – What You Need to Know

-Kristen Murray,  Financial Services Specialist

Based on several recent conversations with both members and non-members, it is my impression that most individuals are unclear as to whether or not they will be subject to the shared responsibility payment in 2017 and subsequent years. There are many areas of the Tax Reform and Jobs Act (TRJA) that are not explicit, the Affordable Care Act (ACA) is not one of them. Here is what you need to know.

2017 tax year – The ACA remains in effect and all individuals must indicate, whether they had minimum essential coverage, qualified for an exemption from the coverage requirement or will make a shared responsibility payment (IRS.gov). If subject to the “penalty”, the calculated payment will be due with the tax return. If taxpayers omit this information, electronically filed returns will be rejected and paper filed returns suspended. In short, you can no longer file without disclosing this information and taxpayers are obligated to follow the law as written in 2010.

2018 tax year – Contrary to popular opinion, for 2018 the ACA remains in effect. Taxpayers will still need to account for the ACA shared responsibility payment when making health care decisions in 2018. Filing requirements will remain the same as the preceding tax year.

2019 tax year and beyond – This is when it happens folks; there is no longer a shared responsibility payment (penalty) for failure to obtain minimum essential health coverage. The ACA remains in effect, but the penalty now calculates as $0.00, rendering it null and void.

Please email FinancialServices@yankeefarmcredit to learn more.

Tax Reform and Depreciation – "A Balancing Act"

-An update on current tax reform from our Financial Services Department

The Tax Cuts and Jobs Act (TCJA) modified several categories of depreciation. What follows is a list of the most significant changes. While the act provides taxpayers increased latitude in regards to depreciation and direct expensing (writing off a current year equipment/machinery purchase i.e. tractor), it requires that taxpayers recognize gain/income when trading certain previously depreciated property (“pay back” depreciation previously taken on the traded equipment/machinery). The TCJA giveth and it taketh away.

Like-Kind Exchanges – Historically, the exchange of depreciable real and personal property of a like-kind class did not result in recognition of gain or loss provided both pieces of property were “held for use in a trade or business”. The TCJA limits like-kind exchanges to real property and as such, exchanges of personal property (machinery etc.) no longer qualify for non-recognition of gain or loss. Essentially, trade-ins of equipment and other personal property will be treated as sales and result in a taxable event.

Cars and Listed Property – Passenger automobile depreciation limits have increased significantly and may be increased further through the use of bonus depreciation. Computers are no longer required to be treated as listed property and as a result no longer subject to the listed property rules that may limit depreciation benefits.

(MACRS) Modified Accelerated Cost Recovery System – The MACRS recovery period for farm machinery and equipment has changed from 7-years to 5-years (excluding grain bins, fencing, or other land improvement) and the 200% depreciation method of MACRS made available when previously farmers had been limited to the 150% MACRS method.

Bonus Depreciation – Bonus depreciation has increased from 50% to 100% (“full expensing”) and has been expanded to include both new and used property of qualifying recovery periods. A word of caution, many states do not recognize (disallow) bonus depreciation and excessive use of such a tool may result in unexpected state tax liabilities.

Section 179 Expensing – Pre-inflation adjustments for Section 179 limits have been increased to $1 million on expensing and the phase-down threshold increased to $2.5 million annually.

For more details and any questions or concerns, please contact us at:

FinancialServices@yankeefarmcredit.com or visit yankeefarmcredit.com

3rd Quarter Financial Results

It's November, and as we face holidays and year-end in the not too distant future I can't help but continue to ask, "where has the year gone"?

November is also when the third quarterly financial results for Yankee are published. We can announce that we have had another good quarter with $2.6 million in net income. A healthy net income is important for us to be able to provide credit and keep a strong patronage program. This is slightly higher than the same three month period in 2016, due to higher net interest income and higher patronage from CoBank, ACB. These increases, however, were partially offset by continued higher expenses due to the investments we are making in our new information technology platform and enhanced risk management practices.

Quarter end loans held at September 30th were $479.9 million, down slightly from year-end. These are the loans Yankee holds onto after selling other loans as a risk mitigation tool. The portfolio continues to be concentrated in the dairy industry with 52.3 percent of loans invested in dairy businesses. Our second largest concentration is timber with 11.8 percent of loan volume. Maple comes in at number three, with 11.1 percent of the portfolio at quarter-end.

Credit quality across the portfolio is seeing some pressures from the continue downturn in the dairy economy, but remained strong during the quarter and well within the risk bearing capacity of the Association. At quarter-end 1.0 percent of the Association loans were classified as nonperforming, a 0.2 percent improved from the end of 2016.

Click here for the full quarterly Report to Shareholders.

2nd Quarter Financial Results

It's August - fair season in Vermont.  But it also means there are only four months left to 2017 - where has the year gone?

August is also when the second quarterly financial results for Yankee are published. We can announce that we have had another good quarter with $2.9 million in net income. This is sightly higher than 2016, due to higher net interest income and income from financially related services. These increases, however, were partially offset by continued higher expenses due to the investments we are making in our new information technology platform and enhanced risk management practices.

Quarter end loans held at June 30th were $479.4 million, down slightly from year-end. The portfolio continues to be concentrated in the dairy industry with 51.2 percent of loans invested in dairy businesses. Our second largest concentration is timber with 13.3 percent of loan volume. Maple comes in at number three, with 11.1 percent of the portfolio at quarter-end.

Credit quality across the portfolio remained strong during the quarter and well within the risk bearing capacity of the Association. At quarter-end 1.1 percent of the Association loans were classified as nonperforming - 0.1 percent improved from the end of 2016.

 Click here for the full quarterly Report to Shareholders.

Q1 2017 Financial Results

A sign of spring (at least for me) is when the first quarter financial results are published. Yankee can announce that we have had another good quarter with $2.4 million in net income. This is slightly lower than 2016, primarily due to the investment we are making in our new information technology platform and enhanced risk management practices.

Quarter end loans held at March 31st were $473.1 million, down slightly from year-end. This is a trend that we see each year, with a dip in the first quarter loan volume numbers. The portfolio continues to be concentrated in the dairy industry with 51.4 percent of loans invested in dairy businesses. The second largest concentration is timber with 13.8 percent of the volume at quarter-end.

Credit quality across the portfolio remained strong during the quarter and well within the risk-bearing capacity of the Association. At quarter end 1.2 percent of the Association loans were classified as nonperforming - unchanged from the end of 2016. The 2016 patronage refund to members in the amount of $5.1 million was paid 100% in cash on March 23, 2017 and the Association's capital position remains strong.

Click here for the full quarterly Report to Shareholders.

Yankee Farm Credit 2016 Annual Report

In preparation for this year's  Annual Meetings, a full version of Yankee Farm Credit's 2016 Annual Report is ready and available for viewing.

2016 Annual Report
Annual Meeting Schedule and Registration

Important Changes to the Withholding Tax Laws

Our Payroll and Record Services department recently received the following notification from the Vermont Department of Taxes. If you require assistance with tax planning, payroll or record keeping services please contact you local Yankee Farm Credit office.


Chazy, NY  518-846-7330/800-545-8374
Derby, VT  802-334-8050/800-370-2738
Middlebury, VT  802-388-2692/800-545-1169
St. Albans, VT  802-524-2938/800-545-1097
White River Jct., VT  802-295-3670/800-370-3276

The Vermont Department of Taxes wants to make you aware of important changes to the withholding tax laws that may affect your business.

W-2 Due Date
Forms W-2, 1099, and WHT-434, Annual Withholding Reconciliation, are now due on or before January 31 of every year. This change moves the due date from February 28. The new January due date will greatly help the Department detect and stop fraudulent income tax filings, protect taxpayer dollars, and help to shorten the refund raeview process. It is important to note that the annual reconciliation filing in myVTax will not be available until early January of 2017.

Payment frequency law change
Vermont’s law regarding payment frequency has been updated to follow the federal rules. Your payment frequency (i.e., semi-weekly, monthly, or quarterly) for Vermont withholding should now be the same as your withholding payment frequency with the IRS. If your IRS filing frequency changes or the Department does not currently have you on the correct frequency, please notify us by mail or email.

If you have any questions regarding your account, please contact us at the number listed below during regular business hours.

Vermont Department of Taxes	Phone:   (802)828-2551
Taxpayer Services Division	Fax:       (802)828-5787
Business Tax Section	Email:    tax.business@vermont.gov

New 2017 Partnership Tax Return Deadline!

NEW TAX CHANGE FOR THIS YEAR!! The partnership 1065 tax return for the 2016 tax year is now due on March 15^th for 2017 and beyond.  The deadline previously was April 15^th.  The deadline has been changed to allow partnerships ample time to disseminate the schedule K-1 information form to their partners in a timely fashion. The schedule K-1 form reports the partner’s share of the partnership’s income, deductions and credits.  Partnerships must have the Schedule K-1’s to the partners on March 15^th.  That gives the partners of partnerships ample time in which to prepare their tax returns by April 15^th when individual tax returns are due. Additionally Vermont partnerships must submit the annual entity fee of $250 by the March 15th advanced deadline.

This change was signed into law in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.  The new due dates create a more logical progression of information to aide taxpayers and tax professionals in filing timely and accurate returns.  Prior to this change many taxpayers estimated the K1 information in order to file their return, which generally resulted in the need to file an amended return, or prepared their individual tax return on extension. This also advances the extensions deadline for partnerships up one month from October 15^th to September 15^th for each year. It is important that partnerships gather their financial information as early as possible to meet this new deadline.  

For additional information or clarification please contact any Financial Service Representative here at Yankee Farm Credit, ACA or your tax advisor. 

New Due Date for 2016 Forms W-2 and 1099

A reminder from our Financial Records and Payroll Services department.

Effective January 1, 2017, electronic Forms W-2, W-3, 1099 and 1096 are due to the IRS by January 31, 2017!

Previously, electronically filing extended the due date to March 31^st. The new January 31^st deadline now matches the due date for paper filed versions of the forms.
So, what does this mean for you?
Wage reconciliation and 1099 reporting information (Forms W-4 and W-9) must be obtained before year end to meet the new deadline.
And how do you prepare?
Put your ducks in a row now before it’s too late by regularly reconciling your records and payroll.
A few tips to help accomplish this:

• Obtain Form W-9 from 1099 vendors before you pay them.
• Keep a record of all payments made to employees and 1099 vendors.
• Keep a log of all tax payments made throughout the year.
• Adopt an accounting program, such as QuickBooks or CenterPoint, to compile all your business activities in one place and produce tax ready reports.

Yankee also offers records and payroll services. Service options are tailored to your needs. Whether it’s at your place of business or in our office, staff is here to help!
Contact your local office for details.

Q3 Financial Results

As we enter the home-stretch of 2016, Yankee can announce that we had another good quarter.

Our year-to-date income at the end of the third quarter was $7.5 million.  While this is down $809 thousand from the same time last year, we are well within our budget for 2016.

Some factors for this reduction include an increase of $1.1 million in the Provision for Credit Losses, primarily due to the increase seen in loan volume since last year, and an increase of $856 thousand in operating expenses.  These adverse factors were partially offset by an increase of $996 thousand in net interest income and an increase of $200 thousand in other income.

Loans held by the Association at September 30, 2016 were $462.1 million, up 2.9 percent from the end of 2015. The loan portfolio continues to be concentrated in the dairy industry, with 49 percent of loans held invested in dairy businesses.  The second largest concentration is timber with 14 percent of loans held, with maple being the third largest concentration with 11 percent.

Credit quality across Yankee's portfolio remained stable during the quarter and well within the risk-bearing capacity of the Association. At quarter end, 0.3 percent of the Association's loans were classified as nonperforming.  This ratio was slightly better than it was at the end of 2015.  There were no loan charge-offs or recoveries during the quarter.  The Association's capital position remains strong.

Click here for the full quarterly Report to Shareholders and here for the quarterly financial news release.

2016 Tax Planning

-a reminder from the tax staff at Yankee

I’m sure that tax planning is the last thing on the minds of most dairy farmers this year, however, while many farms have struggled with low milk prices recently, it is important to remember that if you are making regular debt payments those payments are creating taxable income as the principal portion is not deductible. In addition, if your payables have increased significantly from 2015 you are going to have less ordinary expenses available to offset your income in 2016. Even if you haven’t had a profitable year, tax planning can still be a beneficial exercise. For example; if you have funds sitting in a traditional IRA account you may be able to convert some or all of that IRA to a Roth IRA and pay little or no tax. The benefit to this is that after 5 years the principal and earnings from the Roth can be withdrawn tax free. Another item to consider is harvesting winners and losers from your portfolio to take advantage of the 0% Capital Gain rate for taxpayers in the 15% tax bracket. It’s a good way to free up some tax free cash.

For 2016 the $500,000 Section 179 deduction and 50% bonus depreciation are both available. Both these items have limits and phase outs, consult your tax specialist if you are considering using them.

While both Section 179 and 50% Bonus Depreciation can be useful tools for managing your Federal tax liability, most states are not allowing bonus depreciation and not every state’s section 179 limit has been increased to match the Federal limit.

Prepaying expenses is one of the most common tax management practices that we see; it is also an area that is receiving increased scrutiny from the IRS during audits. So here is a quick review of the rules for prepaid expenses. There are three conditions which must be met in order for a cash basis taxpayer to claim a deduction in the year the prepayment is made.

 

1. The expenditure must be a payment for a supply and not merely a deposit. (You need to have an invoice clearly stating the quantity purchased and the price, delivery before the end of the year is not required.)
2. The prepayment must be made for a valid business purpose and not merely to accelerate a tax deduction. (Some examples of valid business purposes include but are not limited to: ensuring the availability of the supply item or locking in a guaranteed price.)
3. The deduction must not result in a material distortion of income.

In addition you need to be aware that there is a 50% rule that limits the deduction for prepaid expenses to 50% of deductible farm expenses unless you are a “qualified farm-related taxpayer”.

Please contact your Farm Credit Tax Specialist if you have any questions or if you wish to schedule a tax planning meeting.

How to Obtain Your New Vermont Tax Number

Effective September 30, 2016 quarterly withholding tax form submissions and payments (i.e. employee withholdings, sales & use, meals & rooms) must be submitted using the new VT Tax ID number assigned to you late last year.

Don’t know your new number?

• Contact the VT Dept. of Taxes at:
  •  (802) 828-2551 (option 3)
  • or email tax.business@vermont.gov.

• Click here for instructions with print screens, or

• Contact a Yankee Farm Credit Financial Services Representative for assistance.