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41SPRING2012WHYBUYWHENYOUCANLEASEByDwightC.LogeotAsthepresidentofAdvancedGrowthGroupgrowersalwaysaskmex1cWhywouldIwanttoleasewhenIcouldbuyanitemandownitx1dMybestansweristhatyoucanleasetoownandgetallyourtaxmoneybackfaster.Thatwayyougetthebestofbothworlds.Theideathatleasingisforthosewhocanx19taffordtobuyisahugemisconception.Therearemanyadvantagestoleasingdependingonthedirectionyouwantyourbusinesstotake.Leasingitemsratherthanbuyingthemcanhelpgrowabusinessbycreatingbettercash-owattherighttimes.Aleasecanalsobebenecialwhenyouarethinkingaboutsellingortransitioningownershipofyourbusiness.Today90percentoftheleasingwedoisgearedtowardhelpingbusinessownersbetterutilizetheirtaxdollars.Itisverydifculttoincreaseyourbusinessandmaintainahealthycash-owandstillkeepthetaxmanhappy.Leasingtoolsofferastrategictformanydifferentkindsofassetsandoperations.Mostbanksandbrokersmakethemistakeofpaintingeveryonewiththesamebrushbutallgrowershavedifferentgoals.Notwoclientsarethesameandthatx19sdenitelyanaspectofmybusinessthatIenjoy.FlexibilityOneofthemostunder-utilizedbenetsofleasingisthe-exibilitythatitoffers.By-exibilityImeanthattherearedifferentwaysoftakingadvantageofutilizingpaymentsatkeytimes.Whenyouleaseyouareallowedtopullonepaymentaheadtotakeadvantageofthetaxbreakitpresentsx14butonlyonepayment.Thisiswhysemi-annualandannualpaymentsareverycommoninatax-styleleasestructuretheyallowyoutheabilitytomovelargersumsaheadifneeded.Whenyoupurchaseanassetyourdepreciationisxedbecauseyoucanx19tmovedepreciationcredits.WhenyouhaveagoodyearwhynottakeadvantageofitandoffsetitwithanextrapaymentThenextseasoncouldbeverymuchtheoppositewhereyoumaynotneedtheextrawrite-off.Inthistypeofsituationleasingcanhelpwithfuturecash-ow.Leasingalsooffers-exibilityintermsofwhoisgoingtotakeadvantageoftheleasewrite-off.Insituationswherefamilymembersfarmtogetherbuthaveseparateidentitiesandneedthe-exibilityofmovingpaymentresponsibilitiesbackandforthleasingcanbemoreeffectivethanbuying.Whoevermakesthepaymentcanreceivethebenetofthewrite-offandthiscanchangeyeartoyearifnecessary.Animportantpartofleasingisdecidinghowyouwillcapitalizeitattheendofthetermx14orwhetheryouwillcapitalizeitatallortradeitorsellitbeforehand.Youhavealotofoptions.Thisshouldbediscussedpriortoenteringtheleaseastheseoptionscanbeverybenecialforfarmtransitionsorfarmsales.Leasableassetscanincludeanyofthefollowinggrainbinsscalesanddryingsystemspotatostoragefacilitiesirrigationequipmentequipmentshedspull-typefarmequipmentself-propelledfarmequipmentandGPSandelectronics.Forexampleastorageshedforequipmentproduceorgeneralstorageisaclass6itemthatfallsundera10percentdepreciableassetclass.Intherstyearyouareallowedhalfofthatallowance.Ifyouweretopurchaseashedfor100000youwouldreceiveabenetof5000intherstyear.IfyouweretoleasethisitemyourTheBottomLineThisissueofTheBottomLineisbroughttoyoubyAdvancedGrowthGroup.PRINCIPLESANDPRACTICESFORPROFITrstandsecondpaymentscouldbeutilizedforthatrstyear.Thiscouldchangethetaxsituationveryquicklyforsomeoneinataxablesituation.RelationshipsAreKeyThehardestpartofmybusinessiseducatingmyclientsonalloftheoptionsavailabletothem.Manygrowershavelimitedinformationaboutwhatleasingcandointherightsituations.AtAdvancedGrowthGroupwerelyheavilyonourrelationshipswithaccountantsandnancialplannersandthisaddsvaluetoourwork.Thisbusinessiscomplicatedandthesedaysitrequiresmoreexpertisethanever.Weareindependentconsultantsandbrokersx14weworkforyounotthebank.FormoreinformationonleasingoptionspleasecontactDwightLogeotat204-573-7787ordwightadvancedgrowthgroup.com.DwightC.LogeotPresidentAdvancedGrowthGroup