Amarillo Tax Planning

Planning for Land, Cattle and Families

Much of Amarillo's wealth is tied to land, minerals, cattle and family businesses. Planning helps families keep more of it and pass it on. BOMCAS does tax planning for Amarillo clients remotely.

Statewide planning ideas are on the Texas tax planning page; this page addresses land, cattle and family planning in Amarillo.

Drought and Weather Sales

When drought forces ranchers to sell more livestock than usual, they can defer the gain on the extra sales for one year, or, for breeding and dairy animals, defer it longer if they buy replacement livestock within the allowed period, which is extended when the area is designated for drought. Records of normal herd sales in prior years support the election.

Equipment and Machinery

Farm equipment, trucks and machinery acquired after January 19, 2025 qualify for full bonus depreciation. Farmers often buy equipment late in a good year, but deducting too much can waste lower brackets and reduce Social Security credits. We model the year before purchases.

Farm Succession

Many Panhandle farms and ranches are passing to the next generation. Gifts of interests in a family partnership or LLC, sales to children on installment, and the $15 million estate tax exemption for 2026 are tools to consider. Land passing at death takes a new basis, which matters when heirs sell.

Minerals and Royalties

Royalty owners can sell part of their minerals, give interests to family or hold them for income. A sale of minerals held long term is generally capital gain. Gifts of mineral interests to charity can produce deductions.

Wind Leases

Landowners negotiating wind leases should consider how payments are structured. Annual payments are ordinary income spread over many years, and the lease can affect agricultural valuation on the land taken out of production.

Crop Insurance and Disaster Payments

Farmers who normally sell their crop in the year after harvest can elect to report crop insurance and disaster payments for a destroyed crop in the following year. Farm income averaging can then spread a large year across lower brackets from the previous three years.

Gifts of Grain and Cattle

Farmers who give grain or raised cattle directly to a church or charity, instead of selling them and donating cash, keep the sale out of income while having deducted the costs of producing it. The gift must be documented as a transfer of the commodity itself before any sale.

Conservation Programme Payments

Payments under the Conservation Reserve Program are generally subject to self-employment tax, except for recipients who receive Social Security retirement or disability benefits. Retirees leasing land into the programme should take this into account.

Retirement

Farmers and small business owners can use SEP IRAs, solo 401(k)s or SIMPLE plans. Plant employees can maximise 401(k) contributions and decide between pension options at retirement. Roth conversions in lower-income years help retirees.

Selling Farm Equipment

Trading or selling machinery that was fully depreciated produces ordinary income from depreciation recapture, so timing a sale with a purchase in the same year can offset it.

Property Tax

Agricultural valuation lowers property tax on qualifying land. Changing use triggers a rollback tax covering three years. Homeowners should file the homestead exemption and protest values each spring with the Potter-Randall Appraisal District.

Our Process

Review returns and assets.
Project income and tax.
Compare options.
Coordinate with your attorney and lender.
Follow up before year-end.