February 16, 2018

Why Should Farmers Know About Illinois Schedule SA?

On July 6, 2017, Illinois Public Act 100-0022 became law. One item in this Act was an Illinois income tax rate increase effective July 1, 2017. The Illinois income tax rate for individuals, trusts, and estates increased from 3.75% to 4.95% while c-corporations Illinois income tax rate increased from 5.25% to 7%. This change means there were two different Illinois income tax rates for the year. Therefore, the default method for calculating Illinois income tax rates for 2017 was to use a blended rate. The blended rate is a simple average for individuals of 4.35%, and the other entities use a weighted average based on days. The Illinois Schedule SA allows you to allocate income to before and after the rate change to utilize the lower rates. Illinois Schedule SA is not a new form. It has been available in the past for corporations; however, individual taxpayers may use this form since there was a mid-year income tax rate change.

  • Authors: Brandy Krapf, Dwight Raab, and Bradley Zwilling
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February 15, 2018

Fixing the RFS is Getting Easier and Easier

There has been no shortage of ideas in recent months about how to "fix" the Renewable Fuel Standard (RFS). These include application of the various waiver authorities under the RFS, expanding the number of small refinery exemptions, and a $0.10 per gallon cap on the price of the RIN credits used to comply with the RFS. The reason cited over and over for the need to fix the RFS is the high cost of ethanol RINs borne by independent "merchant" refiners. In late January, Philadelphia Refining Solutions declared bankruptcy, citing high RIN costs as a major contributing factor. There is no argument that the cost of D6 ethanol RINs has indeed skyrocketed since 2012. The disagreement is whether refiners have to absorb most of the RINs costs or are able to pass them on to fuel blenders in the form of higher gasoline and diesel blendstock prices. What seems to have gotten lost in all the noise surrounding the political war over the RFS is how rapidly the conditions are changing that created the high ethanol RINs prices in the first place. The key is the "gap" between the ethanol blend wall and the conventional ethanol mandate. In this article, we analyze why this gap is so important to understanding the movement of ethanol RINs prices, how the gap is rapidly shrinking, and what this means for the future level of ethanol RINs prices.

February 14, 2018

Farm Bill Round 1: Dairy, Cotton and the President's Budget

If the farm bill is reauthorized in 2018, the events of the last week will have been the first round. First, Congress revised the Agricultural Act of 2014 (the 2014 Farm Bill) in the Bipartisan Budget Act of 2018. Specifically, a behind-the-scenes agreement between the House and Senate Ag Committees revised cotton, dairy and crop insurance. Second, following closely on the heels of that agreement President Trump released the annual Presidential budget. It included policy recommendations for cuts to farm bill programs. The following is a brief discussion of these issues.

  • Authors: Jonathan Coppess, Nick Paulson, Carl Zulauf, and Gary Schnitkey
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February 13, 2018

Revised 2018 Corn and Soybean Budgets

Revised 2018 corn and soybean budgets are available in the management section of farmdoc. The major revision was to commodity prices. A $3.60 per bushel corn price and $9.60 per bushel price are now used in budgets, closely matching current fall delivery bids. Those prices are higher than in the July 2017 release. Still, the revised budgets suggest low returns and soybeans still are projected more profitable than corn.

February 12, 2018

Weekly Outlook: Corn and Soybean Export Development

Corn and soybean export projections for the 2017-18 marketing year changed substantially in the February 8 WASDE report. The adjustments to export projections for both crops confirmed recent market information associated with export pace and foreign production potential. Exports for both crops will continue to play a large role in price formation during the current marketing year.