Bjorn Swanson

Managing Income Through Smart Timing, Deferral Options, and Practical Planning

For farmers and ranchers, timing is strategy. It's November, and this is where good farmers make great business decisions—saving taxes now or putting themselves in a stronger position for next year. With a rollercoaster of grain prices, higher-than-usual cattle prices, and the constant twists and turns of expenses, insurance claims, and cashflow, planning the final income and expenses of the year is more important than ever.

Year-end tax planning really comes down to two tried-and-true philosophies:

1. Smooth your income over the long term, and

2. Plan ahead for big events before they happen.

Below are the core tools we help producers use every year—straightforward, defensible, and built for what lasts.

1. Prepaid Inputs: A Useful Tool, But Not a Magic Wand

Prepaying expenses is a long-standing way to manage taxable income—but it needs to be used intentionally.

To qualify as a deductible prepayment:

• It must be for a specific quantity (not a dollar amount on account).

• You must have no right to a refund.

• The benefit cannot extend beyond 12 months.

• Prepaids are generally limited to 50% of your other deductible farm expenses.

And one essential reminder:

What you deduct this year, you don’t deduct next year.

A good strategy smooths income—it doesn’t just kick the can down the road forever.

Used well, prepaids help you even out income between high and low years. Used poorly, they create large swings and unpredictable cashflow. Think long-term, not one-year-at-a-time.

2. Deferred Sales: Timing Revenue Without Creating a Headache

Deferred sales allow you to deliver grain or livestock now and take the income next year—a simple but powerful tool for managing income.

Elevator & Auction Yard Deferrals (Practical Reality)

For many producers, this isn’t a formal “binding contract.”

Instead, it’s often a conversation with the elevator or sale barn about holding the check until January.

This still works when:

• The elevator doesn’t issue the check,

• You can’t pick it up early, and

• You don’t have control or access to the funds before year-end.

It’s simple—but it relies on cooperation from the elevator or sale barn.

Stockman Exchange & Other Commodity Exchanges

This is why many producers appreciate tools like Stockman Exchange:

• You lock in the sale,

• The funds are kept at arm’s length,

• And payment isn’t available until the year you choose.

It removes the dependency on an elevator manager remembering the plan, and it provides cleaner documentation if the IRS ever asks questions.

3. CCC Loans: Pulling Income Into This Year (When You Need It)

Not all income timing strategies push income out. Sometimes, pulling income into the current year is the smarter move—especially if:

• You’ve had a lower-income year,

• You normally sell this commodity this year, but the market just isn’t right,

• Or you want to level out unusually high income expected in 2026.

How CCC Loans Help

Under the loan election, you can choose to treat Commodity Credit Corporation (CCC) loan proceeds as income in the year you receive the loan.

Why this matters:

• You pull income into this year, giving you higher basis in the crop.

• Next year, when the crop is sold and you pay off the loan, your taxable income is reduced.

This is the opposite of a deferral—it’s a way to shift income forward when that’s the smarter play.

4. Section 179: Useful, Powerful, and Getting Its Own Detailed Breakdown

Section 179 and Bonus Depreciation remain essential tools for matching equipment purchases with farm profitability—but they need to be used thoughtfully.

Key points to be aware of:

• The deduction is limited by the annual Section 179 threshold (which is high for 2025).

• Section 179 cannot create a loss.

• Unused Section 179 can carry forward.

• Equipment must be placed in service by year-end—not just purchased.

This section is just the basics—the real strategy gets its own article.

If you’d like to explore how Section 179 and bonus depreciation work together in 2025, be sure to look into Kassidy’s feature article. She breaks down the new OBBBA updates, expanded planning opportunities, and practical examples for Montana farm operations. Her piece offers full context on the restored 100% bonus depreciation rules, increased Section 179 limits, and the timing considerations that matter most for equipment purchases, construction projects, and other agricultural investments.

➡️ Read Kassidy's full article: Section 179 and Bonus Depreciation — Full Deductions Ahead

5. Disaster Livestock Sales: Understanding the Two Deferral Rules

When drought, fire, or adverse weather forces early livestock sales, the IRS provides two beneficial deferral options:

A. One-Year Deferral

For selling more livestock than normal, income from the excess can be pushed to next year.

B. Multi-Year Replacement Deferral

For breeding livestock sold because of disaster conditions, you can postpone recognizing income for up to four years or longer if drought persists.

Both tools are great—but the key is knowing when to ask about them and letting your preparer handle the mechanics.

6. Crop Insurance Timing: A Quick Refresher

Crop insurance deferral has very specific rules. Here’s the short version: You can only defer crop insurance payments if:

1. Payment is received in the same year the crop loss occurred;

2. It’s due to a yield loss, not a price decline; and

3. You have a consistent practice of selling that crop in the following year.

SCO, ECO, PRF, and most endorsements are not eligible.

Rather than repeating the whole topic, here is the link to our detailed breakdown:

👉 Full Crop Insurance Deferral Article

7. Practical Recordkeeping: What You Actually Need to Know

You don’t need to track every detail—that’s our job. But you do need to know when something is a tax event and when to call us.

Here’s what matters from your side:

• Tell us when you’ve deferred a sale (especially if it’s grain or livestock).

• Keep copies of large prepaids or have your vendor email invoices to us.

• Let us know when disaster forces early livestock sales.

• Tell us if you used a CCC loan election.

• Keep settlement sheets and delivery tickets handy.

That’s it.

We’ll handle tracking 179 limits, depreciation, disaster designations, and all the technical items behind the scenes.

Year-end planning works best when you simply keep us in the loop.

Final Thoughts: Timing Isn’t About Tricks—It’s About Predictability

Tax planning isn’t about pulling rabbits out of hats. It’s about understanding your operation’s cycle and choosing the timing tools that keep your income steady, predictable, and aligned with your goals.

If you want help reviewing your 2025 strategy—whether it’s deferred sales, prepaids, CCC loans, livestock deferrals, or equipment planning—reach out anytime.

Montana Roots. Future Focused.

Built for what lasts.