Accordion Feature for Agriculture Leases
Provide On-Demand Adjustable Tax Deductions
Bankers’ Bank has developed a type of agricultural lease specifically designed to respond to the fluctuations and variability in taxable income levels on the farm. Simply put, as commodity price indexes rise, so too can tax deductible lease payments.
Agricultural producers have long used leasing and the tax deductible payments as an effective tax shelter tool. The utilization of these tax benefits can vary with the level of taxable income in any given year – a decrease in commodity prices in any given year can reduce taxable income and quickly weaken the need for tax shelter. Conversely, strong commodity prices can suddenly create an immediate and significant need for more tax shelter. Maximizing both the effectiveness and the amount of tax deductions is key.
The BBCLSI Community Bank Lease delivers a modification option that now allows a producer to lengthen or shorten the lease term during the life of the lease, and with this term adjustment of course is a corresponding decrease or increase in the annual payment. The result is a scaling, on-demand change in tax shelter. This model not only can save thousands of dollars for a producer in taxes, but also addresses cash flow stress when prices are low.
The modification option can be used by a producer as many times as needed, and there is never a cost for putting it in place. Interest rates do not change. Credit quality must remain strong.
This innovation in equipment leasing is just one more reason why customers and prospects are better served with a BBCLSI Community Bank Lease. For more information, contact your Bankers’ Bank Correspondent Banker, or simply click Here to email and arrange a brief meeting. We will be happy to further explain how this easy modification option can be used.
BB Community Leasing Services, Inc. (BBCLSI) does not provide specific tax counsel and you are encouraged to contact your tax advisors for advice.