Monday, September 25, 2017

Varley Law Office, PLC



Warren A. Varley
Karen K. Varley
Attorneys-at-Law
201 NE Second Street
P. O. Box 235
Stuart, Iowa 50250-0235
varleylaw@iabar.org


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Please know that the act of sending electronic mail to our firm will not create an attorney-client relationship. Unless you are already a client of our firm, any electronic communication will not be privileged, & may be disclosed.

Tuesday, June 27, 2017

Farm Leases for 2018

Now is the time dictated by Iowa law to begin negotiating crop land leases for 2018 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)
If you wish to terminate a cropland or pasture lease ending March 1, 2018, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2017. This statute does not apply to custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1.
Basing cropland rent on the current CSR2 (updated “corn suitability rating” assessment) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate: iastate.edu/Publications/FM1801 Computing a Farm Rental Rate]. In addition, you can calculate a CSR2 for your farm [http://websoilsurvey.nrcs.usda.gov/app/WebSoilSurvey.aspx]. Below is a table of farmland values and cash rents from last year's ISU surveys in counties for which I prepare farm land leases:


The table above is based upon averages from sometimes limited survey results, but it does give a general idea of what the market for Iowa farm land looks like. The predicted annual rental is based on a 3.25% ROI. The leases I have prepared so far this year now fall in the $2.00 to $2.85/CSR point range, with the higher quality land falling at the higher end of that range. Farm lease rates continue to fall in sympathy with soft commodity prices. Land prices also continue to decline, but at a much slower pace. I would expect that to change if interest rates continue to rise.

Please contact our office if you have questions. Good luck with your negotiations!

Thursday, January 12, 2017

2016 Tax Returns

 Once again it is time to gather your income and deduction records in preparation for filing your 2016 income tax returns.
If your gross household income was less than $62,000, you qualify for free e-filing of your tax return at:
If you choose to have our office prepare and file your federal and state tax returns, you will need to sign and return the engagement agreement on the reverse side of this letter. All professionally prepared tax returns must be filed electronically (“e-file”). IRS will begin accepting e-files on January 23 this year. You should be able to collect your tax records sooner this year because IRS has shortened the deadline for Form 1099 to January 31, and the deadline for Form K-1 to March 15.
As in past years, you must have a contemporaneous written receipt for donations totaling over $250 to a particular charity. I cannot prepare your tax return if you hold any assets outside of the United States. Identity theft continues to be a problem. Please do not send any documents by e-mail that contain social security numbers or bank account numbers, unless they are password protected.
IRS requires mileage logs for vehicles with business use; standard mileage rates for 2016 are:
                                               Federal         Iowa        
Business:               54¢/mi.        54¢/mi.
Medical & moving:  19¢/mi.      19¢/mi.
Charitable               14¢/mi.        39¢/mi.
You are required to send a Form 1099 to any individual, partnership or LLC that you paid $600.00 or more for services, rent or interest paid in the course of your trade or business. Payments to cooperatives, banks and other corporate entities are excluded. Wages in excess of $150 in any quarter require the filing of Forms W-2 and W-3 (for household employees you may file Schedule H with your tax return instead). If you would like us to prepare these forms, you will need to provide us with the information before January 25, 2016.
If you have questions on any of the above or other tax matters feel free to call, e-mail, or stop in. When you have your records ready you may let us know and we will set up an appointment that is convenient for you. Evening or Saturday appointments can be arranged.

Best Wishes for the New Year!

Wednesday, July 20, 2016

2016 Farm Leases


Now is the time dictated by Iowa law to begin negotiating crop land leases for 2017 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)
If you wish to terminate a cropland or pasture lease ending March 1, 2017, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2016 or sign a new lease. This statute does not apply to custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1.
Basing cropland rent on the current CSR2 (“corn suitability rating” or in some regions “crop suitability rating” CSR2 is an updated assessment) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate: http://www.extension.iastate.edu/Publications/FM1801.pdf]. For the third straight year in a row, cash rental rates have declined, pushed lower by continued softness in commodity prices and a decline in return on land to just over 3%, due to low interest rates, low inflation, and volatile stock prices. Below is a table of farmland values and cash rents from last year's ISU surveys in counties for which I prepare farm land leases:

The leases I have prepared so far this year fall in the $2.25 to $3/CSR point range, with the higher quality land falling at the higher end of that range. The table below shows the ranges.
Please contact my office if you have questions. Good luck with your negotiations!

©2016
* http://www.extension.iastate.edu/agdm/wholefarm/html/c2-70.html
http://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-75.pdf

Tuesday, August 25, 2015

2015 Farm Leases

___Now is the time dictated by Iowa law to begin negotiating crop land leases for 2016 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)
___If you wish to terminate a cropland or pasture lease ending March 1, 2016, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2015. This statute does not apply to custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1.
___Basing cropland rent on the current CSR2 (“corn suitability rating” or in some regions “crop suitability rating” CSR2 is an updated assessment) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate: http://www.extension.iastate.edu/Publications/FM1801.pdf]. In addition, you can calculate a CSR2 for your farm [http://websoilsurvey.nrcs.usda.gov/app/WebSoilSurvey.aspx]. Below is a table of farmland values and cash rents from last year's ISU surveys in counties for which I prepare farm land leases:
___The table above is based upon averages from sometimes limited survey results, but it does give a general idea of what the market for Iowa farm land looks like. The predicted annual rental is based on a 4% ROI. The leases I have prepared so far this year continue to fall in the $2.50 to $3/CSR point range, with the higher quality land falling at the higher end of that range. Land prices in our part of the state have fallen roughly 6% since a year earlier (& have continued to soften since the survey), in tandem with lower commodity prices. I would expect farm lease rates to follow a similar trend.
___Please contact my office if you have questions. Good luck with your negotiations!

Sunday, August 10, 2014

2014 Farm Leases: Cash Rent & Hybrid Agreements


--> Now is the time dictated by Iowa law to begin negotiating crop land leases for 2015 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)
--> If you wish to terminate a cropland or pasture lease ending March 1, 2015, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2014. This statute does not apply to custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1.
--> Basing cropland rent on the current CSR2 (“corn suitability rating” or in some regions “crop suitability rating”) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate: http://www.extension.iastate.edu/Publications/FM1801.pdf]. In concert with the slight decline in farm land values and the dramatic drop in grain prices, cash rental rates have remained steady or dropped during the current year. Below is a table of farmland values and cash rents from last year's ISU surveys in counties for which I prepare farm land leases:


--> The table above is based upon averages from sometimes limited survey results, but it does give a general idea of what the market for Iowa farm land looks like. The leases I have prepared so far this year continue to fall in the $2.50 to $3/CSR point range, with the higher quality land falling at the higher end of that range. There continues to be interest in deviating from the traditional cash rent model. By using a formula, tenants and landlords can avoid the often stressful exercise of negotiating a new rental rate every few years in order to keep up with changing economic circumstances. Flex lease formulas can also allow landlords to participate in windfalls during good years and tenants to reduce risk in bad, although current crop insurance revenue products go a long way in protecting farm operators from price and production risk. If you would like more information, I encourage you to contact your local ISU extension office.
--> Water quality issues and increased scrutiny of farm nutrient runoff is currently the prime topic of interest on the political front.
--> Please contact my office if you have questions. Good luck with your negotiations!

©2014