By Miles Dabovich
Texas Agrilife Extension Service Agent
As posted on the High Plains Journal Web site, January 10, 2008.

The 2008 bell has rung and I hope everyone is back to their normal pace of life if there is such a thing anymore. Things here at the extension office are at their normal fast pace of preparing for some major activities that will be taking place in the near future. We are very excited to welcome Maranda Davis on board as our new County Extension for 4-H and youth development. Maranda will replace Mike Mahan in conducting major youth and 4-H programs for Wichita County and I hope you will join us in welcoming her to Wichita County.

I really enjoy writing these news articles and I hope that you enjoy reading them and that they provide you with some useful information. Some weeks it just seems like my deadline approaches in a hurry and I don't have a lot of time to spend on them. When that happens we are very fortunate to have resources from extension service information and also the Noble Foundation in Ardmore, Oklahoma. Both of these are very helpful in providing information that is timely and useful to the readers of my articles. I just want to thank them for their support and assistance and with their help and better time management on my part, we will continue on. I would also like to thank the Times Record News without their support you wouldn't have anything to look forward to every Saturday morning over coffee. Now that I'm getting a little sarcastic I better get on with that useful information that I was talking about.

Name change
When you call our office please don't hang up when you hear Texas Agrilife Extension Service instead of Texas Cooperative Extension Service. As of Jan. 1 the agency has taken on the new brand as part of a new strategy set by the Administration at Texas A&M. More detailed information will be provided soon and we will pass that along as we receive it.

Upcoming events
The Wichita County Junior Livestock show will take place on Feb. 7 to 9 at the Bridwell Agriculture Center. Around 300 FFA and 4-H members will be exhibiting cattle, swine, sheep, goats, poultry, rabbits, and horses. All entries for the show are due with payment to the extension office on Jan. 18. More detailed information will be available as time gets closer and if you any questions about the stock show feel free to call.

The Texoma Farm and Ranch Show is set for Feb. 15 and 16 at the MPEC Center. Several vendors will be on hand to provide information and display the latest products. Educational programs will include a range management seminar, landowner rights and leasing seminar, wildlife management workshops, mare/ foal management workshop, water harvesting seminar, wheat production seminar, and a pesticide certification training and license testing. Flyers should arrive in the mail soon with tickets to the growers breakfast Feb. 16.

Tax preparation
Below is some interesting information from Dan Childs of the Noble Foundation with the coming of the new year I thought this would be useful as people get ready to prepare their taxes.

When a vehicle is used in a trade or business, the expenses to own and operate the vehicle are deductible in most situations. It is common, however, for vehicles to be driven for both business and personal use. In this case the business owner must divide these expenses, usually by miles driven for each purpose.

To deduct expenses, the first requirement is to show that the vehicle was used for business--usually fulfilled by keeping adequate written records. "Adequate records" may include account books, diaries, logs, statements of expenses, trip sheets or similar records. In combination, these will verify expenditures. Although business expense records do not have to be on paper, oral evidence alone may not have sufficient credibility in an audit.

There is a substantiation safe harbor regulation for vehicles used directly in connection with the business of farming that allows vehicle expenses to be deducted without trip by trip substantiation. Under this safe harbor, qualified business use is generally considered to be 75 percent. To qualify for the safe harbor, the vehicle must be owned or leased by an agricultural producer and used during most of a normal business day in connection with the business of farming. The business of farming is cultivating land or raising or harvesting any agricultural or horticultural commodity. It also includes the raising, shearing, feeding, caring for, training and management of animals.

Another options to substantiate business use is by the sampling method. When only one person in the business operates the vehicle, records documenting business use can be maintained for only a portion of the taxable year if the owner can demonstrate by other evidence that the period(s) for which an adequate record is maintained is representative of the use for the entire year. If more than one person operates the vehicle for any portion of a year, the sampling method is disallowed.

Once the business use of a vehicle is established, there are a couple of ways to deduct expenses. Option one is to use actual expenses and the second is using a standard mileage rate. Actual expenses incurred usually include, but are not limited to, such items as depreciation, interest, fuel, tires, repairs, licenses and insurance. The standard mileage rate for 2008 is 50.5 cents per mile, up two cents from 2007, for business purposes and is used in lieu of actual expenses.

If a business owner wants to use the standard mileage rate for a vehicle he or she owns, the choice must be made in the first year the vehicle is available for use in the business. In later years, a business owner can choose to use actual expenses if that method offers a larger deduction. If a business owner wants to use the standard mileage rate with a leased vehicle, it must be used for the entire lease period.

When using the standard mileage rate to deduct vehicle expenses, the vehicle must be depreciated using the straight line method of depreciation rather than the modified Accelerated Cost Recover System. In addition, a section 179 expensing election is not allowed when using the standard mileage rate. In 2007, the Section 179 election allows up to $125,000 of capital purchases, such as farm vehicles with gross vehicle ratings of over 6,000 pounds to be deducted in the year of purchase. In 2008, the Section 179 election will be increased to $128,000. The election must be made in the year of purchase,. However, a business owner cannot deduct more than the taxable income from the active conduct of any trade or business during the year under Section 179. In addition, a vehicle used for personal purposes cannot qualify for the Section 179 deduction in a later year when it use changes to business.

As with any business expense, good recordkeeping is the key for proper substantiation. Good records will allow you and/or your tax preparer to analyze the best choice to deduct the expenses incurred each year for the business use of your vehicle.

This article appeared on High Plains Journal, www.hpj.com, on January 10, 2008.