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Missouri’s New Qualified Beef Tax Credit Ron
Plain In
2007 the Missouri legislature established a new tax credit for cattle
production that took effect in the fall of 2008. The program is
administered by the Missouri Ag and Small Business Development
Authority (MASBDA) within the Missouri Department of Agriculture and
offers an incentive to background and finish cattle in Missouri. The
new law provides the opportunity for a tax credit of 10¢ for each pound
of additional weight put on Missouri feeder cattle. This
new program is available to Missouri residents and to entities with
their principal place of business in Missouri. The tax credit can be
claimed on beef cattle (including Holstein steers) born after August
28, 2008. Breeding stock are not eligible. Weight gain must occur in
Missouri and before the animal reaches 30 months of age. Animals must
be source and age verified by a USDA approved Quality System Assessment
(QSA) program, or Process Verified Program (PVP), or a program audited
and evaluated by the Missouri Department of Agriculture. Records must
be kept until the animals would have reached 42 months of age. Weight
gains on steers and heifers are calculated separately. Qualified sales
weight must exceed the three-year baseline weight by at least 200
pounds in order to collect the tax credit. The formula for calculating the amount of tax credit earned during a year is to multiply the number of head marketed times 10¢ times the difference between the qualified sales weight and the baseline weight. The baseline weight is the producer’s average sale weight of beef cattle marketed at 30 months of age or less during the three years prior to enrolling in the Qualified Beef Tax Credit program, sorted by sex. The baseline weight will need to be updated after three years. For cattle that were shipped to another state for feeding before being sold, the weight at the time they left Missouri is used instead of the sale weight. The qualified sale weight is the annual average weight of beef cattle sold (or shipped out of Missouri, whichever comes first) before 30 months of age sorted by sex for the year for which the producer is applying for the tax credit. Example: The example below is for a producer who enrolls in the Missouri Qualified Beef Tax Credit Program in 2009 and applies for a tax credit in early 2010 on feeder cattle sold in calendar year 2009. Average
Sale Weight (lbs.) Year Steers Heifers 2006
605 554 2007 612 565 2008 580 525 3 yr avg 599 548 2009 807 730 Increase
208 182
The producer’s baseline weight is the average sales weight
of cattle marketed in the three years prior to enrolling; in this case
2006-08. (The baseline will be used without adjustment for three years,
then a new baseline calculated using sale weights in 2009-11.) In this
example, 599 pounds was the average sales weight for steers and 548
pounds was the three-year average for heifers. In 2009, the producer
delays selling his feeder cattle and feeds them longer resulting in an
average market weight for steers of 807 pounds and an average weight of
730 pounds for heifers. Thus, this example producer marketed steers in
2009 at an average weight that was 208 pounds above his three-year
baseline. The producer marketed heifers 182 pounds heavier than the
baseline weight. Only the steers had a 2009 qualifying sales weight
that was 200 pounds above the baseline weight. This producer would be
able to apply for a tax credit of $20.80 for each steer marketed in
2009. No tax credit is available for the heifers since their 2009
average market weight wasn’t at least 200 pounds above the baseline.
The following year, the producer might face the following numbers: Year Steers Heifers 2006 605 554 2007 612 565 2008 580 525 3 yr avg 599 548 2010 858 792 Increase
259 244 The
baseline weight doesn’t change, but since the producer marketed heavier
feeder cattle in 2010, in January 2011 she can apply for a credit of
$25.90 on each steer sold in 2010 and a credit of $24.40 per head on
the heifers sold. (1) Enroll to participate on MASBDA form QBE. Provide your name, address, business information, QSA or PVP program, and documentation of baseline weights. The cost is $50 if postmarked before April 2 and $75 after April 1. (2) Raise beef cattle in Missouri and sell prior to 30 months of age and at an average weight of at least 200 pounds above your three year baseline. (3) Apply for your tax credit on MASBDA form QB between January 1 and March 1 for feeder cattle marketed in the previous year. Include business information and documentation of sales weights. The application fee is $25. Tax credits will be issued about March 31 of each year. No more than $3 million per year of credits will be issued on a first-come, first-served basis. The tax credit is available for tax years beginning after 12/31/08 and ending before 1/1/17. Since producers who feed cattle to slaughter weights in Missouri can’t be expected to increase weights by 200 pounds, the program includes a provision for issuing a tax credit for increasing the number of cattle fed. Additional
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