IRS TO CLASSIFY PEANUT QUOTA BUY-OUT AS 'CAPITAL ASSET' FOR TAX PURPOSES
"WASHINGTON, D.C. -" Congressman Terry Everett, R-Rehobeth, welcomed news that the Internal Revenue Service will announce early next week its decision to classify peanut quota "buy-out" funds as a capital asset and therefore treated as a capital gain for tax purposes. Everett chairs the House Agriculture Subcommittee on Specialty Crops and Foreign Agriculture Programs.
"This is good news for peanut quota holders who have been waiting for weeks to determine how their buy-out payment will be taxed," Congressman Everett said.
"Three weeks ago when there were rumors that the IRS might consider classifying the buy-out as 'normal income' for tax purposes, I immediately wrote to Commissioner Charles Rossotti reminding him that previous IRS rulings have treated peanut quota as capital assets. I noted that a 'normal income' ruling would actually be a reversal for the tax agency."
The IRS decision to classify peanut quota buy-out funds as a capital asset means a rate of taxation from between 15 and 20 percent would be assessed, rather than nearly 40 percent if it had been ruled normal income.
""The difference in taxation will have an important impact on the Southeast Alabama economy where some $170 million in federal peanut quota buy-out funds are expected to be concentrated,"" Everett said.