Episode Transcript
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Speaker 1 (00:00):
Today on the American
Land Seller, our guest brings
something to the table that mostfolks in the land world aren't
talking about but should be.
I'm joined by Alec Bean andCarly Pavlinek of ASM Labs,
better known in some circles asthe Soil Tax Guys.
These two are on a mission toeducate landowners, farmers and
investors about the powerful taxadvantages tied to something we
(00:22):
walk on every day soil powerfultax advantages tied to
something we walk on every daysoil.
Specifically, we're digginginto IRS Section 180, a
little-known part of the taxcode that allows for deductions
tied to soil tax fertilityimprovements.
Alec brings years of agronomicexperience to the conversation,
and Carly's background instrategy and innovation helps
tie it all together in a waythat's easy to understand and
(00:45):
even easier to apply if you ownfarmland.
They're going to explain howproper soil testing,
documentation and lab analysiscan open the door for real
financial benefits and sharesome stories of landowners
who've already seen that impact.
If you've never thought of soilas a tax asset, this episode
might just change the way youlook at the ground beneath your
(01:08):
feet.
Speaker 2 (01:11):
Welcome to the
American Land Seller Podcast
with your host, coby Rickardson.
Coby is an accredited landconsultant and multi-state land
broker with High Point LandCompany.
Join us each week as we exploreall things land.
We bring you fresh insights andexpert guests on sales,
marketing, regulations,economics and so much more.
(01:31):
Visit wwwamericanlandsellercomand find us on one of your
favorite podcast platforms.
Speaker 3 (01:40):
Okay, kobe and our
special guests, let's get
started.
Okay, kobe, and our specialguests.
Speaker 1 (01:46):
let's get started.
Hey, we're back here on theAmerican Land Seller Podcast and
I think everyone I don't knowlike.
This is just totally blows meaway what we're going to talk
about here today.
I don't even know if I'm goingto believe it's a real thing by
the time we're done, but we'llsee.
Apparently, there's aliens andthere's tax loopholes that
(02:06):
nobody even really knowsanything about we're going to
learn about today.
So I am joined by CarlyPavlinek and Alec Bean.
Speaker 3 (02:16):
Carly, did I get the
name right?
Yes, you did.
Speaker 1 (02:18):
Okay, these guys are
with ASM Labs and they are the
Soil Tax Guys.
How are we doing today, alecand Carly?
Speaker 3 (02:28):
Doing good.
Excited to be here.
Speaker 4 (02:30):
Good to be here.
We appreciate the opportunity.
It's going to be a funconversation, especially a
timely one, being right near taxtime.
Speaker 1 (02:40):
Yeah, I think we've
got a lot to cover.
So I don't know that we'regoing to get to the UFOs or
whatever they're called thesedays.
But we can do is we can talkabout how you guys became the
soil tax guys.
So can you just give me an ideaof this witchcraft that you
guys are working with here?
(03:01):
You guys are working with here,and I'll let both of you guys
just kind of talk about whatyou're up to and how you can
help my clients.
Speaker 3 (03:11):
Yes, so it's section
180 of the tax code, so people
listening might be familiar with1031.
So three small paragraphs inthe tax code.
That allows you to take a taxdeduction on extra nutrients in
your soil.
So when you buy ag landanything used for crop, cattle,
(03:31):
livestock we come in afterclosing and do a soil test and
extra nutrients is a taxdeduction.
So on average $500 per acre taxdeduction.
Speaker 1 (03:42):
Wow, $500 per acre,
so that could be more and it
could be deduction.
Wow, $500 per acre on it, sothat could be more and it could
be less.
Speaker 4 (03:47):
Correct Some areas of
the country have been very good
.
Some some have been less goodbut yeah, average has been 500
and our clients have been veryhappy.
Speaker 1 (03:59):
So yeah, I just I had
a guy call me with a little shy
of 1400 acre ranch in Arizona.
So is that like?
Is Arizona and Nebraska?
You're talking different soils,different, different
possibilities.
Speaker 4 (04:12):
Yeah, so every state
has a land grant university and
we use that as our guiding star,more or less.
So I'm an agronomist, I'm acertified crop advisor with the
American Society of Agronomy, soI cut my teeth in the soil
testing world.
Asm was, and still is, a soiltesting company, so spent my
(04:35):
career in the agriculturalconsulting space, and so we use
the land grant universityinformation to determine where
the thresholds are for thesesoil tests.
So every state again has theirown school.
Um, I think you did you.
You mentioned new mexico.
I um new mexico arizona, excuseme, yeah so.
(04:57):
So arizona has the land grantschool I believe it's arizona
state and they say you need xamount of pounds of nutrients
per acre to produce an optimalcrop.
And so when we come in and dothe soil test using these
university approved soil testingmethods, we hope that your soil
(05:18):
test levels are higher thanwhat those optimal levels are,
and that difference between yourtest and the optimal level is
what we assign a value to andthen the client then uses for a
potential deduction.
Speaker 1 (05:36):
Okay, that's fun.
So let's just go.
Let's rewind back to thebeginning, like, is this
something that you've kind ofjust discovered and exploited?
Or is this like because Ihaven't heard very many people
talking about this- yeah, wehear that all the time.
Speaker 3 (05:53):
So it's been in the
tax code since the 1960s, sure,
but it hasn't become somethingthat people are really starting
to use.
until the past, you know, 10years, but we know accountants
have done it since the nineties.
So, um, it's just not talkedabout.
Because it's such a smallwindow of time where you can do
it.
It has to be, you know, aroundtime of closing and then doing
(06:14):
the soil test before the newowner applies fertilizer.
So once they apply fertilizer,we we've had this happen where
you know they forgot appliedfertilizer and we're like, okay,
you missed the opportunity, wecan't go back in time.
So it's kind of tricky withthis tax code.
You really need to know aboutit beforehand.
And then when you're buyingland, you know contact us to get
(06:35):
it done.
Speaker 1 (06:37):
That's kind of.
So.
There are some pretty strictrules.
So this is something that everysingle land professional ought
to have their head wrappedaround this in order to make
sure that we're making these.
You know, just basicallywarning people don't fertilize.
You know, let's see if youqualify.
How does that work?
(06:58):
Do I just get them in touchwith you guys?
Speaker 3 (07:02):
Yeah, that's the best
way to do it, and then we'll
answer any questions they haveand get them set up with the
soil test, and that's just.
The main thing is getting thesoil test done.
Then, once we have that done,they can fertilize, do whatever
they want.
Speaker 4 (07:15):
Yeah, and we kind of
do this in a two-step process.
So the first leg of this firststep is to take a soil test.
So, we have a soil test done.
Then from there, once we havethose results, I do a no
obligation consultation, do anestimate on the value there and
(07:36):
say, ok, client, you have Xdollars per acre in value.
Is that going to be worth yourtime?
Is that worth your accountant'stime, your time?
And if they say yes, that'swhen we move forward the
official report.
So really it's a win-win.
Um, if, if the value doesn'tend up being worth their time,
the worst thing that happens isthey have a fresh soil test on a
(07:56):
farm they just bought right,and this goes beyond just like
testing for fertilizer, right,you're doing a full-blown and
full blown.
Speaker 1 (08:04):
And we just had a
producer on a couple of weeks
ago that talked about, you know,like their every two acre and
two acre grid or something thathe's getting tested every single
year.
You know that he's got like a$60,000, you know built into his
budget to make sure thishappens.
But it also, so my guess is youguys are using the data for
(08:27):
other things other than justtaxes correct?
Speaker 4 (08:29):
Yes, so on the back
end being that we've been an
agronomic consulting companysince the 80s, that's part of
the value you get with workingwith us is you get to, you know,
you have your soil test, youget to hopefully take advantage
of this piece of the tax codeand then, moving forward, you
can utilize our agronomicconsultation services for you
(08:53):
know your fertilityrecommendations and things of
that nature my company highpoint is in a big footprint.
Speaker 1 (09:01):
You you can provide
agronomic services throughout
most of the United States.
Speaker 4 (09:07):
Yep, so to this point
we've helped clients from New
York to California and NorthDakota to Texas, so we've been
everywhere.
If you're selling or buyingland in the United States, we
can help you out.
That is very cool.
Speaker 1 (09:30):
So what kind of time
frame are we thinking here?
I'm thinking like a real estateagent and real estate broker.
If I have, I get a contracttogether.
Is it so you guys want to?
We should just email you, alongwith the title company, that we
got a deal, yeah, and have you,or have our clients reach out
(09:51):
to you, yeah.
Speaker 3 (09:53):
It's best to have the
conversations when you're under
contract.
Then you know they have time todigest it.
Think about it, plan it, allthat kind of stuff.
Speaker 1 (10:02):
Okay.
Speaker 3 (10:03):
Very cool.
Speaker 1 (10:05):
So what else, guys?
What am I?
I mean, there's so much to this.
Speaker 3 (10:08):
Yeah, it's a it's a
great tool to use as you start
to think of investment inproperties.
Like you know, let's say, youmake quite a bit of money every
year.
You know buying some land andgetting this tax deduction can
be part of your strategy.
Speaker 4 (10:24):
So we've had a couple
of clients Alec, you can talk
more about the one client that,yeah, you go ahead and talk
about it, yeah.
So I've got a gentleman that'sbuying a significant portion of
land and he's been successful inother areas of business, but he
is a farmer at heart.
He has been a farmer his wholelife is he is a farmer at heart
(10:46):
and he's been a farmer his wholelife.
And so what he's doing is he'susing these tax the, the, the
dollars he saves in taxes herolls into more land purchases.
So it's kind of this wash rinserepeat cycle where he he buys a
farm, he takes advantage ofthese tax deductions, he buys
another farm with that cash or,you know, helps with the next to
(11:08):
bankroll the next purchase.
So it's an incredible strategyand taking advantage of all the
pieces of depreciation anddeductions that you can.
That's just a smart businessmove.
Speaker 1 (11:21):
So if you're, what's
the rule on?
If you, um, how long do I haveto uh, uh, hold on to the
property once I've got my taxdeduction?
Speaker 4 (11:33):
so there's really no
rule on how long you have to
hold on to it.
It it really becomes more of aneconomics question, uh, because
this will affect your basis inthe property.
So when you do go to sell thatproperty, there is going to be a
clawback in the form of right,in the form of tax.
(11:54):
Uh, the, the government isgoing to want, uh, what, what
you've been keeping from them.
Now, the.
The perfect scenario is a 1031situation.
So you buy a farm, you takethis deduction, you roll that
value into a 1031 on anotherproperty, and so you continue
again.
Part of this whole farmlandstrategy is deferring taxes, and
(12:20):
so if you're a 1031 buyer, andso if you're a 1031 buyer, if
you're a buy and dire, as I liketo call them, this is an
excellent strategy.
So we certainly don't want tosteer anyone away, but the
person that is maybe flippingland quickly, it may not make as
(12:41):
much sense for.
But we can have a conversationabout your strategy and see how
this can fit into it.
Speaker 1 (12:46):
Yeah, because my
thought is, with a 1031 exchange
, you have to hold on to it fora little bit.
You can't just flip land doingthat either, but definitely for
an investor that's going to comein and hold it for five, eight
years, something like that.
This is a great plan to do that.
Guys, if you don't mind, let'stake a quick break and we will
(13:08):
be right back.
The american land sellerpodcast is brought to you in
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Join us today and experiencethe expertise of LandHub's land
marketing professionals.
Whether you're buying orselling, let us show you the way
in the ever-evolving world ofland transactions.
(13:31):
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Landhubcom where your landjourney begins.
All right, we're back withCarly and Alec from ASM Labs.
They are the soil test.
No soil tax people, right?
Speaker 3 (13:53):
Yep soil tax guys.
Speaker 1 (13:55):
Soil, the soil tax.
Guys, I'll get that by the endof this, I'm sure.
So, not everybody's probablygoing to qualify for this.
You know, like immediately, ifI was listening to this, I would
probably be like super excitedand call my accountant and try
and get the setup.
Uh, but this really does has todo with, like it's a three-year
(14:17):
window and you can't havefertilized before you, um, after
you purchase the purchase theground, before you take a soil
test, right after you purchasethe ground, before you take a
soil test, right?
So, alec, can you just let usknow who's going to qualify for
this?
Speaker 4 (14:30):
Who's this going to
benefit?
Yeah, so how the code iswritten talks about those
engaged in the business offarming and on land that is in
the pursuit of an agriculturalactivity, that is in the pursuit
of an agricultural activity,and the accountants and people
that have kind of set up theguidelines for how this works.
They kind of have a litmus teston how this works and how
(14:56):
people can qualify.
So, in order to take this, weneed to establish the beneficial
ownership of the fertilizer.
What does that mean?
Who owns this fertility that'sin the ground?
So it's very hard to argue thatsomeone that buys the land
doesn't also own the fertilityin the land, right?
The next step is we need toestablish the presence and
(15:21):
extent of the fertilizer.
That's, when we come in and dothe soil test, we are measuring
how much soil fertility is outon this property.
Next, the next piece is thebasis to measure the fertility
in the land.
(15:41):
So what are we?
What are we comparing this theyour soil test and what are we
comparing your soil test to,right?
So we say, all right, we haveyour soil test and we're going
to compare them to the landgrant university in your state.
And then, finally, the fourthpoint is the period of
(16:02):
exhaustion.
How long will these soilnutrients, these excess soil
nutrients, last you in growingcrops?
This is very much similar tothe depreciation world, where we
depreciate different items, sayin a building or a fence or a
tile for different amounts oftime, or a fence or a tile for
different amounts of time.
(16:23):
Part of our report does showhow long these nutrients will
last you in a normal croppingenvironment.
Speaker 3 (16:40):
So someone engaged in
the business of farming and if
you can hit all four of materialparticipation, that the owner
has to participate in some typeof way with ag.
So we get this question a lot.
What is participation?
And obviously that could befarming, it, it could be cash,
(17:03):
rent, it could be mending fences, buying something, making
decisions.
All those types of things areparticipation in the farm and ag
.
So that's another portion ofthis tax code.
Speaker 1 (17:15):
So collecting rent
technically is a portion of?
Is that what you're saying?
And just to clarify.
Speaker 4 (17:23):
A lot of accountants
look at rent and then management
of the farm through thatcollection of the rent as a
participation.
Again, we do want to make surewe say that we always defer to
the accountant Right.
We are not accountants, butthat has been our overall
experience.
(17:44):
Is that there's some level herethat most accounts are willing
to go for, or crop share Cropshare too, yeah, crop share.
Speaker 1 (17:52):
Crop share is great
yeah.
Sure, no, that's probably agreat point because you know you
definitely have to make surethat the person, whoever the
person's accountant is becausethey're probably not going to go
to a new accountant just forone tax code you know section.
(18:13):
So what happens?
We talked, hey, we want tomaybe check, to do a soil test,
so we have that available as anasset to our buyers yeah, we
(18:35):
have a lot of brokers, or it'sbecoming more and more of a
conversation with the brokers.
Speaker 4 (18:41):
They're telling their
sellers hey, you know that not
only from the agronomicperspective would this soil test
be valuable to a potentialbuyer, but also from this
potential deduction.
Um, it, it's it.
It's a nice little cherry onthe top for a buyer when they
can come in.
Part of the marketing materialis a soil test and if they're
(19:05):
savvy to this piece of the code,they can utilize our services
to kind of get an idea of whatmay be out there.
And, of course, when they makethe transaction they can
actually take advantage of that.
So we do have a lot more peoplebrokers starting to use soil
tests as part of their marketingregimen.
Speaker 1 (19:28):
That's.
I mean.
That's smart, because then youat least have an idea.
I guess another question Iwould have is is since this is
becoming more and more popular,is there any reporting data
where you can call you guys andsay, hey, we have seen like this
in your area, or is that notsomething that we're to yet?
Speaker 3 (19:52):
Somewhat.
So I'll give an example.
So we did a property inColorado and it came in there
two different tracks, you know,same area, owned by the same
person, you know, probably takencare of in the same type of way
, since it was owned by oneperson and then sold to two
different people around 2,500something per acre tax deduction
(20:16):
and one was 1,050 per acre taxdeduction.
And that was wild for us to seethat difference.
I mean both great taxdeductions, but to be in the
same property, that wassurprising to us.
So it really just depends onhow well it was taken care of
and what was spread on therebefore.
Speaker 1 (20:36):
Yeah, that's kind of
insane too, if you think.
I mean, like you're saying,it's an average of $500 an acre
is what you're seeing as, butthey.
But it can get, I guess, pretty, pretty valuable.
Speaker 4 (20:49):
Yeah, we've had
plenty, we have plenty over a
thousand dollars an acre.
We've done plenty of reportslike that.
You know we just want to muchlike the brokerage world an acre
.
We've done plenty of reportslike that.
Much like the brokerage world.
You guys want to manage yourseller expectations right.
So we want to manage our buyerexpectations as well.
Speaker 1 (21:11):
Ride that fine line
of I want to be valuable to the
client but I don't want tooversell it to the point where I
get a bad reputation.
Speaker 3 (21:17):
Yeah, that's fair,
that's fair.
Speaker 1 (21:22):
Okay, so let's talk
about your testing.
What does testing involve?
Like, if I, if my, if I get myseller to say, call you guys and
say, hey, um, we're going totest this to see what the value
is so that we can advertise this, to test this to see what the
(21:42):
value is so that we canadvertise this, um, what, um,
what are you guys lead times?
How long does it take?
Speaker 4 (21:45):
you know that kind of
stuff, yeah so we charge ten
dollars per acre for soiltesting and that is going to be
a full, a full soil test.
Again, that does include all ofthe back end agronomic
consultation as well.
So it's kind of packaged upnicely there for a client, but
we always defer to what theland-grant university in that
(22:08):
person's state is wanting to seefor soil testing.
There's there's lots ofdifferent soil testing methods.
Uh, so different, uh, actual,different, actual in the lab,
different methods of testing thesoil.
So every university kind of hasa different approach to how
that's done.
So we make sure to follow thoseguidelines.
(22:28):
And then, as well as thequestion always comes up well,
how many samples do I need?
That is going to vary a littlebit per state as well.
Do I need?
That is going to vary a littlebit per state as well.
Most states have kind of astandard you need one sample per
two and a half to 10 acres orsomething like that.
One sample needs to representtwo and a half to 10 acres.
(22:51):
So again, we always defer towhat the university is looking
for in that sense and we feelthat that helps mitigate our
clients' risk because we'refollowing the rules.
Speaker 3 (23:05):
Yeah, that makes
sense, but so timing-wise how
much notice do we need to giveyou?
Speaker 4 (23:15):
So we typically
assuming the weather is good and
all goes well, we can usuallyget this turned around in
roughly two weeks.
If the ground is frozen whenthe property changes hands,
which happens in my area of theworld, in your area of the world
, kobe, we may have a little bitlonger of a lead time there,
(23:39):
but typically two weeks is whatwe can expect.
Right now we're under the gunwith tax season and occasionally
we have clients say, hey, canyou get this done?
And we are scrambling.
Speaker 1 (23:57):
Does it still affect
this tax date, April 15th, then
this year?
Speaker 4 (24:00):
Yeah, we have a
number of clients that purchase
farms.
Well, all throughout last year,of course, but you know, in the
land business as you know, Iwould actually love to know.
Maybe you know Kobe know I, Iwould actually love to know.
Speaker 1 (24:22):
Maybe you know kobe
the uh percentage percentage of
land that transacts in the lastquarter of the year.
Oh, you mean like on apercentage wise?
Speaker 4 (24:29):
yeah yeah, 40, 40 to
45 yeah, so we have a number of
farms that are we're working onthat transacted in December 31st
for all intents and purposes,and it was frozen and we're
working on getting those out now.
Speaker 3 (24:46):
Yeah, Quick
turnaround time.
With that.
We're like is it un-frozen yet?
We're like checking the weather, trying to figure out if we can
get there.
So that makes it hard.
I suppose, yeah, yeah, youprobably do a little running
around here in the spring, oh,yeah, especially with um
transactions that just happenaround this time frame because,
(25:09):
like we said, I have to do thesoil test before they apply
fertilizer.
So we had a client last weekthat was like, okay, just went
on, closed on the property andwe're going to fertilize in a
week, so can you be there onTuesday?
We're going to fertilize onWednesday and we're like, oh my
gosh, it's like four days fromnow.
Yeah, and we got it done.
(25:31):
But you know it's that time ofyear where everyone's applying
fertilizer.
So if you're closing aroundthis time, you know you want to
make sure you get that done yeah.
Speaker 1 (25:41):
Well, no, like I said
, I think it goes back to it's
like one of those planning deals, where it needs to be, in our
prep and our pitch bucks, and tolet people know that, hey, this
is, this is something that'sout there and let's let's you
know it's going to cost you thisX amount of dollars, it's going
to cost you this X amount ofdollars, it's going to cost you
$10 an acre to find out, but itmakes your land immediately
worth this much more.
Speaker 3 (26:01):
Yeah, and then we
didn't talk about the investment
for the reporting.
So it's $10 an acre for thesoil test and $30 an acre for
the official reporting, so $40altogether.
Speaker 1 (26:12):
Right, but you're
going to do the test and then
decide whether or not, you needto go forward.
Speaker 3 (26:17):
Correct.
Speaker 1 (26:18):
Correct Right Now.
That makes total sense.
All right guys.
Well, if you don't mind, we'regoing to take a break and we're
going to come back and do onemore segment if you've got time.
Sounds great, perfect.
Speaker 5 (26:32):
We will be right back
.
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It's your legacy.
Speaker 1 (28:01):
All right, we're back
here with Alec and Carly, the
Soil Tax Guys.
Speaker 3 (28:11):
Does that offend you
at all, Carly, that you're a guy
.
Speaker 1 (28:13):
You can say Soil Tax
Gal whenever it's me.
Okay, it's the Soil Tax Guysand Gal.
Speaker 3 (28:22):
It doesn't offend me
um it's a great name.
Speaker 4 (28:25):
It's funny how it
came up too.
Oh yeah yeah.
No one can remember asm andcarly started finding out that
people were saving her name intheir phones.
As what?
The soil tax guy?
The soil tax gal.
Speaker 3 (28:37):
Oh, really yeah, and
so that's how the name came
about.
Speaker 1 (28:42):
Well, I'm saving you,
carly, as the soil tax guy in
my phone, so I don't want to getin trouble for what you want to
gender yourself as All right,so going back to this process.
All right, so going back tothis process, I'm just like.
(29:06):
My mind immediately goes to howthis becomes valuable to my
sellers.
Right, and especially you knowwe were talking during the break
there is areas of the countrywhere we've seen a significant
gut punch as far as prices go,punch as far as prices go,
especially in those prices whereyou've got we like to call it
the black gold, you know, thereally really good soil with no
irrigation, stuff like that.
That fluctuates a little bit,probably more than the part my
(29:28):
stuff will go up, but then itholds fairly well, like we saw
where some guys saw like a 10 or12% correction last year.
In some other parts of thecountry we saw like less than a
2%, and we'll probably see two,three, four years of a 1% to 3%
down and then we'll have apretty big gain once we get
(29:49):
commodity prices back where weneed them to be and honestly I
think that say whatever you wantto about this administration I
think commodity prices areprobably going to rally in the
next 18 to 20 months anyway, soI think we'll be okay, even with
the tariff talks and all that.
So how quickly can I use thisas far as, like, if I'm telling
(30:10):
my seller, let's go get thistest done so that we have this
little bargaining chip right forwhen we're still on our land,
we could potentially make thisthing worth instantly $500 an
acre more, right, I mean, that'swhat you're saying.
Speaker 4 (30:23):
There's the potential
there, yeah, so, as far as from
a mechanical standpoint, when abuyer purchases the land, their
accountant is generally goingto want to take this deduction,
uh, in the year that it wasincurred.
Uh, we were talking earlierabout why we've been running
(30:44):
around so much this spring.
Well, for those, those peoplethat uh purchased in in Q4 of
2024, uh, they're trying to takeadvantage of this on their 2024
taxes.
So so there's there's.
So there's that piece of it.
Some accountants do opt tospread this out over three years
(31:04):
.
So they'll say, okay, maybe wedon't need this full deduction
amount or whatever.
Again, we don't knoweverybody's tax situation, of
course, their accountants wouldinfinitely better.
And so the accountant might say, hey, let's actually spread
this out over a three-year timeframe, and most of the time how
(31:25):
that looks is taking 60% thefirst year, 30% the second year,
and then that final 10% thelast year, the third year, so
kind of spreads it out.
If you're expecting decentincomes for the next couple of
years, it may make sense to tryto spread it out.
(31:46):
If you're not expecting decentincomes, you may try to twist
your accountant's arm to get itall in one year.
It's hard to say.
Like you mentioned, crop pricesare quite low right now and the
next couple of years may be alittle bit of a tough road, so
packing in these deductions nowmay end up making more sense.
Speaker 1 (32:11):
Yeah, I think they
interest.
Like I told you earlier, I hada producer on earlier that was
talking about running negativewith soybeans right now and very
, very small margin of profit oncorn, and that's because he has
some pretty good contracts.
So you know, like definitelythat's one of the things to
(32:31):
consider too is, if you're aproducer and you're probably
going to have some losses, thisis maybe not going to help you
very much because it's a taxbreak, right Could be.
Speaker 4 (32:41):
And you meant Go
ahead, sorry.
I thought immediately of yourquestion about how do you make
this valuable to your sellers,right?
So if we're going into asituation where land prices may
be down slightly, you mentioneda gut punch, and so land prices
may be down.
(33:01):
Land may not be flying off theshelves like it was None of us
know, we can't crystal ball herebut this is valuable to the
seller because they're takingthe initiative to well, a take a
soil test and show that theirland has been taken care of from
(33:23):
an agronomic perspective.
So that's valuable in itself toa buyer.
I don't know about your area ofthe world, but it's rare for me
to see a farmland marketingmaterial with a soil test on it.
It's somewhat rare and I thinkthat would set the seller and
(33:44):
you as, by extension, the broker, apart from the competition by
just having a soil test firstoff, and then the second piece
is having that idea of okay, weknow that this farm is in good
shape and we can probablyestimate that there's some per
acre value there that the buyercould take advantage of.
(34:05):
Again, it's only available tothe buyer, but if the seller is
savvy to the situation, they maysay okay, we want to help the
buyer take advantage of that.
Speaker 1 (34:15):
Well, that's smart,
because I mean and again, like I
just keep trying to wrap myhead around how does that work
for everybody?
And you know, like, if you'regoing to have I go back to this
I always think of this as money,but sometimes it's not real
money, right it's you may notgain anything if you don't have
any.
(34:35):
You know, if you're in negativetaxes and you're not going to
have any tax liability which,again, talking about, farmers
are pretty good about not havingmuch tax liability most days
but still I think that, like yousaid, I think that I can say I
(34:56):
have a classification of soil,but I don't ever I mean to your
point, I don't ever have a soiltest that's run for a.
Speaker 4 (35:06):
so that's an
interesting idea too, right
recently, where you know we givean estimate to a farmland buyer
and their accountant says well,you have more deductions than
you need, or you know you're notmaking any money, and so there
(35:30):
is always the possibility ofdeferring those losses and we're
not accountants, but that isone of the situations that we've
run into that account say, okay, we'll, we'll defer.
You know they may take thissoil fertility deduction but
defer a different deduction.
Speaker 1 (35:51):
Gotcha, you've seen
that yeah so we don't maybe have
to, you know because you can.
There's all kinds of there'sways.
I it's got my brain spinning soI'm trying to.
There's lots of, lots ofdifferent things you can do.
That's, that's really reallycool.
Speaker 3 (36:07):
I just remember this
one guy saying you know on Alec
what you're talking aboutdeferring other things.
This is the one tax deductionwhere you know if you don't use
it, you lose it.
And I remember when he said itlike that, I was like, I mean,
that's true, you know, you haveto take this in such a small
window of time.
It's better to defer otherthings, so that way you can, you
(36:28):
know, use this type of taxdeduction.
Speaker 1 (36:31):
Well, and to circle
back to what you were talking
about with the accountant'sdifference between wanting to
use it all in one year, I meanlike my guess is because they
met the government right.
So you just never know whensomebody might make this their
hill to die on, for whatever itis you know and so yeah, so it
(36:53):
might be the smart way to do it.
It's like let's just take thistoday, because we have it today.
So, yeah.
Let's just dig into a little bitof okay, like I think we've
kind of geared everythingtowards basically, like, row
crop agriculture throughout thisentire interview.
We were talking during thebreak pastures, ranches,
(37:14):
whatever you know like, whateveryou want to call them.
It has to be a pretty big chunkof land for us in Nebraska to
call it a ranch.
You go to Colorado 50 acresqualifies.
So I don't you know like,depends on who's marketing it.
But it occurred to me like,realistically, there's a lot of
people that have bought ranchesover the last couple of years
(37:35):
that haven't fertilized it.
Probably, I mean unless you'recounting't fertilized it.
Probably, I mean unless you'recounting the cows on it.
Maybe that does that count.
If I got cows running aroundand fertilized dollars.
Speaker 4 (37:46):
it's all about
dollars spent Okay.
Speaker 1 (37:50):
Well, they're
expensive yeah.
Speaker 4 (37:52):
Right now.
Yeah, I'd love to love to be acattle rancher right now,
Goodness.
Yeah, some of our bestscenarios have been in the
pasture environment.
One that comes to mind was apretty large ranch in one of the
(38:13):
western states and the valuecame back at like $2,500 an acre
.
And like the value came back atlike $2,500 an acre and the
gentleman deferred quite a largeamount of tax there.
And so pasture is great, it isan agricultural.
Again we come back to it's anagricultural activity.
You are growing food for youranimals to graze on in a pasture
(38:37):
.
So some of our best resultsactually have come from pasture.
And it's funny, it's kind ofcounterintuitive, because I have
people ask all the time well,this probably won't work on
pasture.
Again, some of our best resultshave come from pasture.
Speaker 1 (38:55):
That's pretty
fascinating because it's like
I'm always looking for a reasonto become, to create a value for
myself and what I do.
And so, even that, if I can gosearch my clients you know that
have or my not even my clientsbut my competitions clients you
know that have uh, hopefullythey're not listening to this
but, um, call those guys up andsay, hey, you know, did you
(39:19):
think about this?
Have you considered this?
And so that's extremely,extremely smart.
So, yeah, I just heard of afriend of mine I don't know if
they're using you guys orsomebody else, but it's a
similar project where they'reusing the soil tax credit to, or
(39:45):
soil tax exemption, whateveryou want to call it to.
He turned a two-deal thing intoa five-deal thing using this,
because there were peoplehanging out with some money,
didn't know what to invest in,couldn't figure, you know like
there was only about a 4.5%, 5%return if they were to invest in
the land, whereas they thoughtthey could go throw their money
(40:08):
into the stock market and dobetter.
And then they were able tobring this and get this instant
tax credit.
And so you know, and so, again,I see the value in it.
It's just a matter of gettingour clients to you guys to
figure out and trusting you guysto make sure you're taking care
of them.
I think that's the big thingand so not just run a bunch of
(40:28):
tests and then well, it didn'twork.
So that's why I like that 10and 30 deal.
It may cost 40 in the long run,but it only costs that much if
the soil qualifies Exactly Yep.
What did we not think of whilewe were doing this episode, guys
?
I mean geez, I think I have avery simple amount of questions,
(40:51):
you guys probably could askeach other questions for five
minutes.
Speaker 4 (40:55):
Right questions for
five minutes, right?
Well, I think you know steppinga little bit outside of the
soil fertility world.
There I mentioned earliereverything that's kind of
available to someone fordeductions or depreciation.
So if you're familiar with thecommercial real estate world, if
(41:17):
you're familiar with thecommercial real estate world
commercial property buyers theyoften have a company come in
that does cost segregationstudies and that company will do
a study on the building thatthey purchased and assign values
to everything in the propertyand they can really juice their
(41:40):
returns on that commercialproperty.
So this is something verysimilar and we are actively
working towards serving otherareas outside of the fertility
piece of this.
We believe that, while the soilfertility is an extremely
valuable leg of what we're doing, extremely, an extremely
(42:01):
valuable leg of of what we'redoing, we believe what we have
coming down down the line hereis uh is going to benefit
clients, uh, even in an evengreater way.
So keep an eye out for that.
There's, there's so many thingsthat clients should be taking
advantage of when it comes to uh, farmland appreciation that is
uh, that I mean that.
Speaker 1 (42:19):
I mean it's just, we
just like just a couple of weeks
ago we went to the landconference and like just from
everything from data centers tobattery storage for power, to
like all this stuff, like whatwas it Somebody presented at the
um?
Let's make a deal that thereyou have a buyer looking for
100,000 acres of you know likemediocre to you know not great
(42:48):
farmland, pasture land that theycan repopulate.
You know like, reforest it, youknow, for a carbon credit.
I mean it's just, we have gonefrom it's worth X amount of
money because it's you know itgrows corn to it's worth X
amount of money.
And then some you know it'sworth this much because it grows
corn.
And then you know, if you workwith Walmart, you get a carbon
(43:10):
credit if you do these amount ofthings too.
Now you can if you don'tfertilize and before you
fertilize, you can get a taxcredit.
Just crazy amount of things thatwe got to pay attention to.
So I appreciate the fact thatyou guys brought this to my
attention.
Carly, it was awesome to meetyou, and down in Arizona I think
that's where we were, yeah, soI appreciate you guys sponsoring
(43:38):
that too.
That was a big thing for ourorganization.
I think you met a lot of greatpeople.
It's really hard to hate thosepeople when you go home and have
to duke it out with them.
We just had a podcast oneducation, land education and
stuff, and it was people that Icompete against once in a while
(44:00):
were on the podcast and it waslike at least I'd like to lose
to them and not somebody thatdoesn't know anything you know
like, so, but well, guys, Iappreciate the time and the
information.
And how do we get ahold of youfolks, if you guys excuse me,
you guys?
Can we get ahold of you folksIf you guys excuse me, you guys?
(44:20):
We get a hold of you if we needyou.
Where's your?
What's your back?
Speaker 3 (44:24):
You can just send us
an email.
So send me an email, carly K aR L Y at a S M labsnet.
Or text nine eight four, three,four, four, six, one six.
Or text 984-344-6169.
Speaker 1 (44:39):
Perfect, and that'll
get the ball rolling.
Speaker 3 (44:43):
Yeah.
Speaker 1 (44:43):
All right, and with
your permission, I'll put your
website and your contactinformation in the show notes
for all the platforms that we'reon, so that way people can find
you if they need you.
Speaker 5 (44:58):
Sounds good.
Speaker 1 (44:59):
Definitely saving you
in my phone under the tax,
whatever soil tax guys.
Speaker 4 (45:07):
Sounds like a plan.
Speaker 1 (45:09):
All right guys have a
great rest of your day and we
will see you all down the road.
Speaker 2 (45:15):
As we wrap up another
episode of the American Land
Seller Podcast.
Thank you for joining us.
Visit wwwamericanlandsellercomand find us on one of your
favorite podcast platforms.
If you would be so kind and youenjoyed today's insights,
please like, subscribe, rate,follow and review us on whatever
app you are listening orwatching on.
(45:35):
Connect with us on social mediafor updates.
Until next week, kobe wishesyou success in your land
endeavors.
God bless you and have a greatweek.
The American.
Speaker 1 (45:47):
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