Estate tax policy changes affects farms and ranches

A major federal tax policy is set to expire at the end of 2012, and it could have a significant impact on Montana's farms and ranches. The federal government taxes estates as the property changes hands; under current federal law, estates valued at less than $5 million are exempt from the tax; estates over that threshold are taxed at 35%. Unless Congress acts, this tax policy is set to expire at the end of the year, which means that all estates valued at $1 million or more will be taxed at 55%. Attorney Brand Boyar explained, "The estate tax is a transfer tax. It's a tax on the ability to transfer value at death. In order to calculate the tax you look at something called the gross estate, which is everything that you own or have control over." Montana's farming and ranching community says this could have a detrimental impact on their business. Errol Rice of the Montana Stockgrowers Association said, "When a family ranching business is put in the position to where they have to sell off parts of the ranch, or all of the ranch, or parts of the cattle, or all of the cattle, essentially that part of your business is gone and it really diminishes the ability of that next generation to come back and take over the family business." Rice says farmers and ranchers sometimes are land-rich and cash-poor, so when the tax comes due they often times don't have money in the bank to pay it...more