April 18, 2014. A good starting point to value a farm is looking at the previous five years of tax returns. Keep in mind that a farm tax return is an imperfect summary of income. But, it is a good place to start. Here is a list of other information you need in order to properly value a farm:

  • Detail listing of all farm equipment, breeding stock, bins, irrigation equipment and other capital assets including description of general condition and estimate of fair market value. (this would include make, model and year)
  • Copies of farm insurance policies.
  • Copies of bank statements, deposit slips and cancelled checks for the past three years.
  • Detail listing of inventory including but not limited to corn, beans, wheat, hay, cattle, hogs, horses, other grain and/or livestock, including seeds, indicate location, accounting method and production year, details of grain sealed and related loans.

Detail listing of all receivables from others indicating name and terms. This would include price later contracts.

  • Copies of any IRS audit examination reports of notices for the last five years.
  • Copies of all farm accounting record books, including but not limited to general ledger, journals and sales records. If on Quickbooks, Peachtree or Excel, a complete backup along with any passwords for the prior 5 years. Also, include any outside prepared financial statements and information.
  • All legal business records, including but not limited to incorporation papers, minutes, LLC agreements, partnership agreements, leases, buy-sell agreements, employment contracts, deferred compensation agreements, retirement plans, perks, any other restrictive agreements, and any other agreements related to farm business. If any agreements are verbal, please describe in detail.
  • Description and documentation on any actual or suspected environmental contamination and estimated clean up liability.
  • Gift tax returns related to farm business.
  • Detail listing of ownership, including ownership percentages and restrictions on ownership. (i.e.: limited, buy-sell, etc.)
  • Describe farm operations, including but not limited to acres farmed, acres owned, types of grain and commodities raised, livestock operation, detail lease agreements, verbal or documented partnerships, marketing methods, tillage timing and practices and general history of farm business.
  • Details of prepaid expenses. This would include, but not limited to seed, fertilizers, chemicals, fuel, tillage and other prepaid amounts.
  • Copies of the most recent hedge/contracts for commodities statement from brokerage account and all documents related to all contracts.
  • Detail listing of all supplies, seed, fuel, L.P., chemicals, fertilizers on hand.
  • Detail listing of all loans, notes payable, Commodity Credit Corporation loans for a period of three years.
  • Detail listing of other liabilities, including contingent liabilities and lawsuits.
  • Detail listing of all owned and leased real estate, including legal description, number of acres, tillage acres, acres in pasture, original cost and estimated fair market value and/or rent.
  • Provide a summary and detail of all oral agreements including but not limited to cash and share crop leases, equipment and labor sharing and other oral agreements.
  • Copies of all financial statements given to banks, other lenders, financial planners, insurance agents and anyone else.
  • Copies of USDA and crop insurance records and production records, including a detail list of prevented planting.
  • Copies of other detail livestock records, tag numbers, breeding records and production records.
  • Copies of all W-3 Forms, W-2 Forms and payroll records. Copies of all 1099 Forms issued.
  • Other information and documentation as the circumstance require.

For more information on how to value a farm during divorce, contact the Goosmann Law Firm at info@goosmannlaw.com or call 712-226-4000.

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