Heartland Ag Group, Sikich, Advantage Capital, The Climate Corp presented in Decatur and Springfield Illinois to give an update on where agribusiness was in 2014 and where it is going for 2015

1. 2014 Agribusiness Update
©2014 Sikich LLP. All rights reserved.
December 4, 2014

2. Agenda
3:45 p.m. – 4:00 p.m. Welcome Time & Registration
4:00 p.m. – 4:10 p.m. Sikich LLP
» Introduction
4:10 p.m. – 4:30 p.m. Dale Aupperle, President, Heartland Ag Group Ltd.
» Current Issues in Agriculture – Leases and Land Values
4:30 p.m. – 5:10 p.m. Anthony Metzner, Vice President, Advantage Capital Partners
Timothy Hassler, Principal, Advantage Capital Partners
» Investing in the Future of Agribusiness
5:10 p.m. – 5:25 p.m. Break
5:25 p.m. – 6:05 p.m. Nick Braden, Regional Sales Manager, Climate Corporation
» Using Precision Ag for Field and Yield Insights
6:05 p.m. – 6:25 p.m. Tom Bayer, Partner-in-Charge, Agriculture Services, Sikich LLP
» Current Issues in Agriculture – Tax Update
6:25 p.m. – 6:30 p.m. Q & A
Join us for cocktails and hors d'oeuvres following the seminar.

3. Riding the
Agricultural Super Cycle!!
December 4, 2014
By:
Dale E. Aupperle, AFM, ARA
President- Heartland Ag Group Ltd.
1401 Koester Drive, Suite 100
Forsyth, IL 62535
******
Phone: (217) 876-7700
Fax: (217) 876-7724
E-mail: dale@heartlandaggroup.com
Web: www.heartlandaggroup.com
Sikich Agribusiness Seminar

5. Current Ag Trends
Note some of the following general observations regarding
agricultural conditions throughout our respective agricultural
areas:
 Declining Grain Prices
 Expensive Farm Inputs
 Squishy Farmland Values
 Ongoing Weather Concerns
 Planted Acreage Shifts
 Cash Rent Concerns
 Technology Advancements
 Uncertain Global Demand
 Crop Insurance Safety Net
 Increased Sensitivity to Farming Risk
 Relatively Low Interest Rates
 Outside Capital on Sidelines
 Larger Farming Units
 More Absentee Ownership
 Threat of Inflation/Deflation
 Global Financial Quagmire
 Uncertain Ethanol Prospects
 Fear of the Future

6. Thoughts on a Sunday Evening
All of us gather our thoughts - - and keep our eye
on the ball in different ways. Here is a collection
of charts I look at every Sunday evening - - the big
picture is wonderful!

8. As of December 4, 2014
13 Year Uptrend Broken
Correction Over?

9. Downside
breakout
negative
for grains!

10. Be careful if an
uptrend develops.

11. Stock market is
looking good on the
Dow Jones.

12. Historically high
prices are over!

13. Critically important
uptrend line
gives way.

15. Tile Drainage Systems
(are becoming prevalent)

16. 2014
Illinois Farmland Values
& Lease Trends
▼ 19th Annual Report
▼ Covers Calendar Year 2013
▼ Lots of Farm Real Estate Transactions
▼ Updates on Rents & Leasing Trends
▼ A Team of Over 70 Professionals
- Professional Farm Managers
- Accredited & State Certified Appraisers
- Licensed Farmland Brokers
www.ispfmra.org

17. All Categories of Farmland
The Great State of Illinois
These (rounded) figures are the average as reported by each region
on the categories shown.
Excellent Good Average Fair Recreational Transitional
Region 1 $12,700 $9,100 $9,300 - - $6,000 $25,400
Region 2 $12,900 $10,000 $7,100 $5,900 $4,300 $17,500
Region 3 $13,600 $9,500 $6,900 - - $3,400 - -
Region 4 $12,300 $9,500 $7,600 $8,700 $4,500 $25,000
Region 5 $11,500 $9,100 $7,000 $4,400 $3,100 $7,500
Region 6 $12,600 $9,900 $8,100 $7,200 $2,900 - -
Region 7 $12,900 $10,000 $6,800 - - $3,300 $37,600
Region 8 - - $10,300 $9,200 $7,500 $3,900 $10,100
Region 9 - - $9,400 $7,900 $5,900 $3,000 $16,300
Region 10 - - $10,000 $5,600 $4,200 $2,700 - -
Average $12,600 $9,700 $7,500 $5,850 $3,700 $19,900
Averages are dangerous - - but they give us a snapshot of
each category (for comparison).

19. Buyers and Sellers
• Buyers: Local farmers 64%, Local investors 14%,
Non-local investors 9%
• Sellers: Estate sales 52%, Individual investors,
14%, Retired farmers 11%
• Reasons for Selling: Settle estates 50%,
Received a good price 22%

20. Comparing Farmland to other
Financial Assets
Here is a quick comparison of how farmland compares in its overall return - -
it’s the best!
Asset/Index
1970 – 2010
Average
Annual Return
1990 – 2010
Average
Annual Return
Farmland 10.77% 10.80%
Mtg./REITS 9.09% 9.49%
Aaa (Bonds) 8.24% 6.85%
10 yr Treasury 7.20% 5.45%
Dow Jones 6.52% 6.84%
S & P 500 6.24% 5.75%
CPI 4.29% 2.63%
PPI 4.03% 2.47%
CRB Spot Index 3.25% 2.40%
Note – From Bruce J. Sherrick, PhD at the University of Illinois.

22. Uptrend Interruptions
In the last four decades the Illinois farmland uptrend was
interrupted on three occasions:
Years 2008 – 2009 Sideways for a year - - after
doubling in value from 2001.
Years 1998 – 2001 A 15% correction - - after an
eleven year uptrend from 1997
with farmland values rising by
92%
Years 1980 – 1987 A 50% correction - - after
farmland values advanced nearly
500% from 1982. This one was a
bubble.
In summary – Perhaps history gives us some guidelines for our
current thought processes. It doesn’t look like a bubble to us!

25. 2013/14 Illinois Farmland Sales
Here are several representative top quality land sales that have occurred throughout
the central part of the state during year 2013 and into 2014 (to date):
2013
County Date Acres
Price
Per Acre
DeWitt Apr 2013 66.50 $13,600
Shelby May 2013 134.00 $13,150
Moultrie Jun 2013 160.35 $12,473
Christian Jun 2013 120.00 $15,300
Piatt Jul 2013 281.35 $13,050
Macon Aug 2013 160.17 $13,000
Douglas Nov 2013 960.00 $14,583
Logan Nov 2013 80.00 $12,200
2014
County Date Acres
Price
Per Acre
Christian Nov 2014 40.00 $12,400
Macon Oct 2014 120.13 $12,750
Moultrie Oct 2014 62.15 $12,100
Coles Nov 2014 73.60 $13,300
Shelby Nov 2014 52.00 $11,100
Piatt Aug 2014 80.00 $12,550
Logan Oct 2014 103.37 $12,500
Sangamon Oct 2014 40.00 $13,500

26. What is a Farm Lease?
• Method to divide annual farm income and
expenses
• Rewards investor for owning land
• Compensates farmer for operating the land
• Reflects the risk taken by both parties

27. General Types of Farm Leases
• Cash Rent – Fixed payments to landowner
• Flexible Cash Rent – Bonus rent paid to landowner
• Crop Share – Share of income/expenses by both
parties
• Modified Crop Share – Deviations from historical
sharing of income/expenses
• Custom Farming – Landowner hires farmer to
operate the land

29. Incomes from Alternative Lease Types, 2013
Land Quality
Lease type Excellent Good Average Fair
------------------ $ per acre ---------------------
Traditional crop share 320 270 230 186
Cash rent 347 281 242 197
Custom farming 394 344 279 226

30. Historic Cash Rents, Midpoints
Land Quality
Year Excellent Good Average Fair
$ per acre
2007 183 164 144 120
2008 241 207 172 138
2009 267 221 187 155
2010 268 231 189 156
2011 319 271 220 183
2012 379 331 270 218
2013 396 339 285 235
2014 375 323 277 219

31. Farmland is what it earns!
Let’s look at three scenarios which help forecast the 2015 land value trend
(using 75% corn and 25% soybean rotation). It will take a combination of good
yields and reasonable prices to have stable land values!
Stable
Net Income
Declining
Net Income
Corn Beans Corn Beans
Yields 210 58 210 58
Grain Prices $4.25 $11.00 $3.50 $10.00
Govt. Payment $0 $0
Gross Income $840 $695
Projected Cash Rent $335 $285
Operating Expenses -$35 -$35
Net Income $300 $250
Investor Return 2½% 2½%
Projected 2014
Land Value
(per acre)
$12,000 $10,000

32. Heartland Outlook
December 2014
Agriculture is experiencing incredible forces from every angle. At Heartland
Ag Group Ltd., we are watching the following key areas:
 Commodity Prices – My friend Richard Brock calls this the biggest bear
market in history. Let’s hope we can average $4.00 for corn and $10.00 for
soybeans as minimum prices in our future!
 Bushels Per Acre – Rain makes grain - - and our 2014 El Niño season is
forecast to repeat itself next year! Trend line yields should increase going
forward.
 Weather Trends–Worldwide weather is crucial - - it has minimized our
global stocks. But it looks like we will rebuild them quickly with good
global weather.
 Interest Rates – We are at historic lows - - attractive for
farmland mortgages. Slowly rising long term interest rates
are suggesting a change is coming.

33. Heartland Outlook
December 2014
 Alternate Investments – Agriculture is always competing with other
financial opportunities. As farmland’s performance levels off - - the
competition from other financial assets is enhanced. Money could leave
agriculture.
 Investor Demand – Our current farm earnings outlook is discouraging
some investors who are now on the sidelines. That is a significant but
temporary change.
 Farmer Demand – Our neighbors are spending their high commodity
prices and crop insurance proceeds. When that dries up - - look out.
 Net Farm Income – is the primary driver of farmland values - - and
projections are dropping 20%! Don’t forget - - farmland is
what it earns!

34. Don’t Forget
 Farmland is a growth stock!
 Farmland is what it earns!
 Farmland is a hedge against inflation!
 Farmland is the new world currency!!
At Heartland Ag Group Ltd. - - the upcoming pressure
on farmland earnings and declining number of investor
and farmland buyers will put pressure on land values.
2015 will be a year of squishy land values!
Save your money - - to Buy a Farm!

35. One Last Thought:
“If you eat - - then you
are a part of
Agriculture.”
Leland Glazebrook
Farm Broadcaster
WDZQ Radio

36. Advantage Capital Partners
Presentation for Sikich Agribusiness Event
December 4, 2014

37. Advantage Capital Partners Summary
Advantage Capital Partners provides equity and debt financing to established and
emerging companies located in communities underserved by conventional sources
of capital. Since 1992, the firm has invested more than $1.9 billion in companies
from a diverse array of industry sectors including manufacturing, technology and
business services, among others. The firm has offices in New Orleans, St. Louis,
New York, Austin and other locations.
Advantage Capital Partners is an investment adviser registered under the
Investment Adviser Act of 1940. Registration does not imply a certain level of skill or
training. This release is not intended to be an advertisement subject to the rules
under the Investment Advisers Act of 1940.
Proprietary and Confidential.© All rights reserved 2014 37

38. Advantage Capital Agribusiness Partners,
LP Summary
 $154.5 million fund size; 5 year investment horizon; 12 year life
 Formed through Rural Business Investment Program, as a Rural Business Investment
Company (“RBIC”)
 Nine Farm Credit banks represent limited partner group
 All investments must be Farm Credit eligible
 Max investment size of $15.45 million per company (10% of fund)
 Target portfolio mix of 50% mezzanine debt/50% equity
 Within equity component, targeting 50% minority equity investments and 50% control
investments
 At least 75% of investments (by dollars and number) must be in rural areas
 Seeking growth stage or mature businesses
 No startups or project finance
Proprietary and Confidential.© All rights reserved 2014 38

39. Why Agribusiness?
 Backbone of rural America
 US farmers provide 18% of world’s food supply on only 10% of the world’s farmland
 Long term market dynamics very favorable
 Global population increase; rising incomes resulting in changing diets (particularly
more protein)
 Crop yield improvements not keeping pace with global demand increase
 Trends require more capital for infrastructure, soil fertility, seed technology, crop
chemicals, water conservation and other productivity/yield enhancement
 Continued strong demand for healthy, natural, organic, traceable and functional foods
 Average age of farmers and agribusiness owners continues to grow; will require
significant capital and operating expertise for wealth transfer and succession plans
Proprietary and Confidential.© All rights reserved 2014 39

40. RBIC Fund: General Areas of Investment
Inputs
 Agricultural
Machinery and
Equipment
 Animal Health and
Nutrition
 Fert / Chem
 Seed
 Water
 Biotechnology
Distribution / Retail
Agri-Retail
Specialty Retail
Food Services
Bulk Distribution
Primary Production
Local / Organic / Natural
Specialty Crops
Botanicals / Spices
Grain Storage and
Handling
Infrastructure
Greenhouse and
Nursery
Processing
Consumer Food
Functional Food
Pet Foods
Food Packaging
Food Safety
Rendering
Waste Water
Recycling
Proprietary and Confidential.© All rights reserved 2014 40

41. Key Investment Characteristics
 Lower middle market companies
(generally $10-125 million of revenue)
 Target investment size range of $3-15
million
 Strong, experienced management team
 Growing revenue or poised for growth
 Serving attractive, large markets
 Generally, cash flow positive
 Reasonable financial leverage
 Proprietary or defensible product line
 Ability to protect margins
 Diversified customer/supplier bases
and continuity of both
 Clarity on exit mechanics
 Repayment/refinance for debt
investments
 Reasonable, identifiable universe of
acquirers for equity investments
 Co-investors with relevant investment
or industry experience a strong plus
Proprietary and Confidential.© All rights reserved 2014 41

42. Case Study: Cage Free Egg Production
Company
 State of the art egg
production facility
 600,000 layers
 5.3 million eggs
 Introduced through
private equity firm
focused on agribusiness
Capital Need
 To convert facilities to a
cage free environment
Our Interest
 10 year contract in place
with established, safe
customer
 High quality management
team
 Exceptional board/co-investors
with deep
experience in the industry
 Opportunity for follow-on
Financing
 $2.1 million preferred
equity
 Minority position
 LLLP structure
Key Points
 State specific farming
statutes added
complexity
 Environmental
concerns
 Employee base
 600K chickens are
loud
 Chickens poop a lot!
Proprietary and Confidential.© All rights reserved 2014 42

43. Case Study: Botanicals
Company
 Process and supplier of
bulk herbs and botanicals
 90% collected in the wild
 400+ customers
 Health food, cosmetics,
flavoring, spices, etc.
 Introduced through Senior
Lender
Capital Need
 Owner was ready to
transition into retirement
 Required capital and
fresh ideas to grow
Our Interest
 Niche product and
industry
 Highly fragmented with
room for consolidation
 Growth market
 International reach
Financing
 $2.6 million equity
 Control position
 LLLP structure
Key Points
 Control deals are
always more complex
 Entrepreneurs need
hand-holding
throughout the process
 Transition plans are
critical
 Key employees are
critical
 Use 3rd parties
Proprietary and Confidential.© All rights reserved 2014 43

44. Case Study: Manufacturing
Company
 Producers of heat
exchangers, pressure
vessels and tanks
 80% revenue from
agribusiness clients
 Introduced through
Private Equity Group
Capital Need
 Owner was ready to
transition into
retirement
Our Interest
 Large available market
 High quality production
capabilities
 Opportunities for expansion
 Opportunities to improve
processes and market
penetration
 Large, long-term customers
Financing
 $10 million one-stop
 Control position
 Senior debt, sub-debt, equity
 Revolving line of credit
Key Points
 Be prepared to
weather economic
downturns
 Transition plans are
critical
 Excellent support staff
go a long way in small
businesses
 Be creative and nimble
 Be patient
Proprietary and Confidential.© All rights reserved 2014 44

45. Questions and Answers
Thank You

46. The Climate Corporation
Agribusiness Update Seminar
Precision Ag for Field and Yield Insights
December 2014
46

47. Disclaimer
Certain statements contained in this presentation are "forward-looking statements," such as statements concerning the
company's anticipated financial results, current and future product performance, regulatory approvals, business and
financial plans and other non-historical facts. These statements are based on current expectations and currently available
information. However, since these statements are based on factors that involve risks and uncertainties, the company's
actual performance and results may differ materially from those described or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits
and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual
property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of
biotechnology products; the success of the company's research and development activities; the outcomes of major
lawsuits and the previously announced SEC investigation; developments related to foreign currencies and economies;
successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our
manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the recent increases in
and expected higher levels of indebtedness; the company's ability to obtain payment for the products that it sells; the
effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and
other risks and factors detailed in the company's most recent periodic report to the SEC. Undue reliance should not be
placed on these forward-looking statements, which are current only as of the date of this presentation. The company
disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect
actual results.
© 2014 The Climate Corporation. All rights reserved.
Trademarks
Trademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation. All other
trademarks are the property of their respective owners.
© 2014 Monsanto Company

48. Our History
2006
2013
Today
Founded by
Dave Friedberg
Acquired by
Operationally
independent,
wholly owned
subsidiary
© 2014 The Climate Corporation. All rights reserved.

49. The Climate Corporation Today
SOFTWARE
INSURANCE HARDWARE
© 2014 The Climate Corporation. All rights reserved.

50. How we fit within Monsanto’s Vision
© 2014 The Climate Corporation. All rights reserved.

51. Monsanto’s Mission
© 2014 The Climate Corporation. All rights reserved.

52. Monsanto’s Technology Leadership
© 2014 The Climate Corporation. All rights reserved.

53. Our mission
Helping Farmers Sustainably Protect
and Improve Their Operations
• Protect against what growers can’t control (insurance,
marketing)
• Improve the decisions growers can control (agronomic
services)
© 2014 The Climate Corporation. All rights reserved.

54. Integrated Solution:
The Climate Corporation Targets Farmers’ Most Critical Decisions
© 2014 The Climate Corporation. All rights reserved.

55. Technology Trends
© 2014 The Climate Corporation. All rights reserved.

56. We are building the OS for the farm
One System Across All Your
Devices and Equipment
© 2014 The Climate Corporation. All rights reserved.

57. The OS for the farm includes several
components
• Software & Data Science
• Software platform for farm management
• Unique agronomic insights & advisory
• Hardware integration
• Leading the industry in yield enhancements
• Unrivaled precision & accuracy of data
• After-market add-ons (any brand)
• Deep integration with software systems
• Field level data & analytics
• Industry leading soil analytics
• Evolving strategy to collect other field level
data and insights
© 2013 The Climate Corporation. All rights reserved.

58. How we will deliver
• Integrated services: Deep integration with Climate ecosystem
• Software (Climate Basic & Pro), Hardware (Precision Planting), Field
© 2013 The Climate Corporation. All rights reserved.
(Solum)
• Software expertise: World class talent, modern technologies
• Development team centered in San Francisco, heart of Silicon Valley
• Modern technologies and agile development processes
• Data science: Data & models build unique products & services
• Data driven scenarios analysis and planning

59. Winning with software
• Only few eventual winners: Software gravitates to a few compelling offerings –
expertise and scale start a flywheel of innovation that leaves others behind
• Must be a core competency: Software needs to be a core competency – Top
developers don’t work for companies that consider software ‘an IT function’
• Speed matters: Think weeks and months, not years
• Legacies hurt: It is much harder to innovate on a shaky, rigid foundation
• Future is in the cloud: Web, mobile and cloud solutions
• Migrations are painful: Trying to move to web, mobile and cloud from 90’s
© 2013 The Climate Corporation. All rights reserved.
technology is daunting

60. Climate Corporation Ramp UP:
Opportunities with Product Upgrades and Market Expansion
© 2014 The Climate Corporation. All rights reserved.

61. Climate Technology Platform

62. The Climate Technology Platform
Unique and proprietary technology powers Climate’s products to deliver
value for growers
Weather Monitoring | Agronomic Modeling | Weather Simulation
© 2014 The Climate Corporation. All rights reserved.

63. Climate Basic
Climate Advisors and other tools are designed to assist with farming decisions,
and do not substitute for in-person monitoring and sound farming practices.
Data and recommendations are estimates based on The Climate Corporation’s
and third parties’ statistical and agronomic models, research, and data.
Individual results may vary, as weather, growing conditions and farming
practices may vary across growers, locations and years. Data and
recommendations do not modify any rights under insurance policies purchased
through The Climate Corporation’s affiliates.

64. Climate Basic optimizes daily decisions
and is available for free at climate.com
Make more informed production decisions and save time with:
• Information customized to each field
• Information updated as it happens
• Integrated weather, tracking and scouting information
Field
Workability
Weather Field Alerts Reports
Details
Scouting &
Available for 2015 for corn, soybeans and wheat
Notes
© 2014 The Climate Corporation. All rights reserved.

65. Climate PRO
Climate Advisors and other tools are designed to assist with farming decisions, and
do not substitute for in-person monitoring and sound farming practices.
Data and recommendations are estimates based on The Climate Corporation’s
and third parties’ statistical and agronomic models, research, and data. Individual
results may vary, as weather, growing conditions and farming practices may
vary across growers, locations and years. Data and recommendations do not
modify any rights under insurance policies purchased through The Climate
Corporation’s affiliates.

66. Climate Pro builds on Climate Basic to optimize
profitability per acre
Increase per acre profitability
• Plan with confidence
• Helps anticipate issues before yield is reduced
• Supports optimizing your response to events as they happen
• Assists with maximizing efficiency of time and budget
Planting
Advisor
Nitrogen
Advisor
Pest &
Disease
Advisor
Field Health
Advisor
(FHA)
Harvest
Advisor
Revenue
Advisor
Available for 2015 for corn, soybeans and wheat
© 2014 The Climate Corporation. All rights reserved.

67. Precision Planting

68. Precision Planting
© 2014 The Climate Corporation. All rights reserved.

69. Precision Planting Roadmap
• Continue to build easy to use tools to have our
platform in more cabs
• Develop tools that continue to measure and execute
recommendations
• This feeds Climate PRO Advisors
• Develop robust distribution network to support
hardware sales and service
• Signed an OEM agreement with CaseIH for factory integration
of equipment

70. Climate Insurance

71. Risk Management from the farm OS
• Insights and advisory: Help growers
plan risk management and execute
in-season
• Leverage field level data to inform financial
planning – insurance, financing & marketing
• Help farmers track and manage their
operational plan – yield & revenue forecasts,
marketing advisory & execution, claim alerts
• Automated reporting & claims
• Automated acreage & production reporting
direct from field data
• Instant claims identification and adjustment
• Endorsements tied to farm practices
• Provide insurance cost savings for employing
optimal farming practices
Climate Agent Portal
© 2013 The Climate Corporation. All rights reserved.
Financial &
operational
advisory
Automated
reporting &
claims
Endorsement
s tied to farm
practices
OS for the Farm

72. Why now? What has changed?
• Hardware: Precision hardware is finally here
• Software: We now have an OS for the farm
• Data: Silos are good for farms, not data – Open Ag Data
Alliance
• Expertise: Software problems, are best solved by software
companies
© 2014 The Climate Corporation. All rights reserved.

73. Data Privacy

74. Guiding Principals On Data and Privacy
The data created by a farmer, or generated from equipment the farmer owns or
leases, is owned by that farmer and should be easily managed.
• It is the grower’s choice to share their data and with whom to share it
Basic data services should be free.
• We shouldn’t charge for online storage of data but rather for the value we can
provide from analysis of the data
Farmer’s data should be easily shared across systems.
• Farmers should have flexibility and communication amongst their operating
systems to gain additional insight and maximize profit potential
The Climate Corporation will regularly utilize third party audits to ensure we are
adhering to our Guiding Principles on Data and Privacy.
• Transparency and integrity are our guiding principles
© 2014 The Climate Corporation. All rights reserved.

75. American Farm Bureau Federation
On Wednesday November 12th, the American Farm Bureau
Federation announced an industry-wide data use and privacy
agreement among agriculture technology providers.
Climate signed that agreement along with John Deere, Dupont
Pioneer, National Corn Growers Association and other industry
organizations.
Farmers own the data created by their farm equipment.
This agreement will make it easier for farmers to embrace new
technology.
Articles:
Wall Street Journal: Agricultural Firms, Farm Groups Strike Deal on Crop Data.
Reuters: Farm Groups, Ag Tech Companies Agree on Data Privacy Standards
www.climate.com/principles
© 2014 The Climate Corporation. All rights reserved.

76. Thank you!
QUESTIONS?

77. 2014 Agribusiness Update
Seminar: Tax Update
©2014 Sikich LLP. All rights reserved.
Tom Bayer, Partner
Springfield, IL
December 4th, 2014

78. Why are we here?
©2014 Sikich LLP. All rights reserved.

79. Extenders: Will They Get Passed?
• November 26, 2014 Update: An agreement has been reached that
10 provisions previously expired on 12.31.13 would be made
permanent. Significant business and individual provisions include:
• Increase in expensing of asset purchases to $500,000, with a
phase-out for businesses that purchase more than $2mm
• Research Credit made permanent
• Built-in Gains period for S Corporations is permanently reduced
to five years
• Enhanced charitable deduction for food inventory
• Tax-free distributions for IRA account holders if directed to
charity
©2014 Sikich LLP. All rights reserved.

80. Extenders: What Does it Mean if the
Changes are Enacted?
©2014 Sikich LLP. All rights reserved.
• Asset purchases made, or to
be made in 2014, will create
immediate tax benefit
• Later filing season: IRS and
software companies update
• Reduced planning uncertainty
going forward

81. Extender Opportunities in Ag: Research
Credit
• Remember this is a credit, not a
deduction, so the credit amount
calculated reduces your federal tax
liability, dollar-for-dollar
• In general, time spent developing and
testing a new business process or
product may qualify
• Wages for personnel, supplies and
outside expenditures for contractors all
constitute qualifying expenditures to
compute credit
• General rule of thumb: Credit nets to
about 10% of qualifying expenses
• Significantly underused: Administrative
burden is the biggest obstacle
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82. Affordable Care Act Provisions
• If you have employees, know
the rules!
• Reimbursements of employee
health insurance for individual
plan may invoke penalties in
2014
• Solution: Pay additional comp
but don’t tie it directly to health
plan cost
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83. 2014 Individual Tax Brackets
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84. 2014 Planning Thresholds – Individual
Return – Adjusted Gross Income (AGI)
• Phase Outs of itemized deductions and personal exemptions begin at
$305,050 for Married Filing Jointly
• There is a 3.8% tax on Net Investment Income for all filers with
Modified AGI of over $250,000
• NII is generally derived from passive income from investments,
rents, etc
• NII is not income from active businesses, i.e. S Corp earnings on
K-1 if shareholder is active, sale of ownership in active business
• For Married Filing Jointly, the tax on $226,850 of income, which is the
top of the 28% bracket, is $50,765―a combined federal rate of 22%
• Consider managing income to lower brackets if possible, but not
to zero!
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85. Traditional Strategies: Cash Basis Taxpayer
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• Prepay expenses: Farmers
can prepay for up to 50%
farmer expenses of current
year
• Deferred payment contracts:
Enter into smaller increment
contracts to allow flexibility
• Farm income averaging

86. CPA humor…..
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87. Property and Equipment: “New” Rules in
Effect in 2014
• Commonly referred to “Repair Regs” or “Cap and Repair Regs”
• IRS regulations: No new law; regulations draw a line in the sand
• Document tax accounting method for various repair costs,
materials and supplies used in the business, equipment
purchases and improvements to buildings
• May require some additional filing requirements for 2014:
Form 3115 and some election statements
• Opportunities with new rules
• Review depreciation schedules for one-time write-offs
• Buildings placed in services: May have some opportunities to
accelerate write off or deduct repairs previously capitalized
©2014 Sikich LLP. All rights reserved.

88. Retirement Plans
• I401(k) for sole proprietors
• Employee deferral amount up to $23,000
• Employer match of 25% of wage
• Max amount at $52,000, plus catch up
for over 50
• Set up by year-end; fund when you file
your return
• Roth IRA
• $5,500 per year can be contributed, plus
catch up
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89. Retirement Plans (continued)
• Roth IRA
• Contributions can be withdrawn at any time, without penalty
• Earnings and rollover contributions subject to more stringent
withdrawal requirements
• Qualified withdrawals are tax-free
• For younger taxpayers, Roth IRAs provide a more favorable
option for retirement savings, based on assumptions
• No RMDs from Roth IRAs
• SEP (Simplified Employee Pension)
• 0-25% of wages up to a maximum contribution of $52,000
©2014 Sikich LLP. All rights reserved.

90. Domestic Production Activities Deduction
• Deduction is computed as 9% of income from Qualifying Production
Activity
• This is a deduction that doesn’t require you to incur an expense
• Deduction limited to 50% of wages: Generally is the most significant
limiting factor for small agribusiness
• For retail agribusinesses, a portion of their activity may be defined as
“production” activity
• Rule of thumb:
• Income, after allocating overhead costs, exceeds $100,000
from a line of business, and
• Wages exist
• Consider taking a position on deduction
• $100,000 of income may yield a 2-$3,000 tax benefit (9%*100,000*
applicable tax bracket)
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91. Non-Cash Wages and Gifts
• Grain or livestock wages
• Must follow the rules: VERY IMPORTANT
• Avoid SSI and Medicare tax
• Savings to employee (no withholding of 7.65%) and employer
match of 7.65% on amount provided
• Grain or livestock gifts
• Gift to a charity is a way for farmer to reduce tax burden
• Net gift, when considering tax savings, is less than fair value of
gift
• Unsold grain valued at $5,000, transferred to charity, is an after
tax gift of $2,700
• Best to gift prior year crop in subsequent year
• For high income earners, has same impact as directing IRA
RMDs to charity!
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92. Final Thoughts on Taxes
• Ensure you keep your tax
professional informed of
business changes
• Bracket planning: Paying taxes
at lower rates may make sense
• Reducing taxable income to -
0- can “cost” opportunities
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93. ©2014 Sikich LLP. All rights reserved.
Questions?