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How to Prepare for a Not-For-Profit Financial Statement Review 

For not-for-profit organizations, financial transparency is more than a best practice, it’s a responsibility. Donors, board members, and grantors rely on accurate financial reporting to understand how resources are being used and to make informed decisions about future support.  A financial statement review provides an added level of credibility and assurance without the full scope of an audit. …

For not-for-profit organizations, financial transparency is more than a best practice, it’s a responsibility. Donors, board members, and grantors rely on accurate financial reporting to understand how resources are being used and to make informed decisions about future support. 

A financial statement review provides an added level of credibility and assurance without the full scope of an audit. Understanding what to expect and how to prepare can help your organization approach the review process efficiently and confidently. 

What Is a Financial Statement Review? 

A financial statement review is a type of assurance service in which a CPA evaluates your organization’s financial statements to determine whether they are free of material misstatements. Unlike an audit, a review does not involve testing internal controls or verifying transactions, but it does provide limited assurance that the financial statements are presented in accordance with generally accepted accounting principles (GAAP). 

A review is often required by lenders, grantors, or boards of directors when an organization requires an independent level of limited assurance that its financial statements conform to professional standards, without the extensive procedures of a full audit. It serves as a middle ground for growing organizations that have moved beyond a simple compilation but do not yet necessitate a full-scope audit.

Why a Review Matters 

While less extensive than an audit, a financial statement review still offers significant benefits to not-for-profit organizations. It helps: 

  • Increase credibility with funders and donors 
  • Identify inconsistencies or potential issues in financial reporting 
  • Strengthen internal accounting processes 
  • Provide valuable insights into your organization’s financial health 

A review can also serve as a stepping stone toward future audits as your organization grows and financial reporting requirements expand. 

How to Prepare for a Financial Statement Review 

Preparation is key to a smooth and successful review process. Here are several steps your not-for-profit can take to get ready: 

1. Organize Your Financial Records 

Ensure your accounting records are complete and accurate. This includes general ledgers, bank reconciliations, accounts payable and receivable schedules, and payroll documentation. Organized financial data allows your CPA to conduct the review efficiently and minimizes follow-up questions. 

2. Reconcile All Accounts 

Before the review begins, verify that all bank, investment, grant, and liability accounts are reconciled through the end of the reporting period.

3. Review Revenue and Expense Classifications 

Make sure revenues and expenses are properly classified according to your chart of accounts. For not-for-profits, this includes distinguishing between restricted and unrestricted funds and separating program, management, and fundraising expenses. 

4. Prepare Supporting Documentation 

Your CPA will likely request supporting documents for significant transactions, grants, or contributions. Having invoices, contracts, and grant agreements readily available will help the process move quickly. 

5. Evaluate Internal Controls 

Even though a review does not include formal testing of internal controls, it’s a good opportunity to assess your systems for managing cash, approving expenses, and safeguarding assets. Addressing weaknesses ahead of time can strengthen your financial management and reduce future risk. 

6. Communicate with Your CPA 

Schedule a pre-review meeting to discuss timelines, expectations, and any major changes in your organization’s operations or funding sources. Clear communication helps ensure that the review focuses on what’s most important to your organization. 

What to Expect During the Review 

During a financial statement review, your CPA will perform analytical procedures, ask management questions, and review documentation to assess the accuracy of your financial statements. The goal is to confirm that your financials make sense based on your organization’s activities and records. 

At the conclusion of the process, your organization will receive reviewed financial statements accompanied by an Independent Accountant’s Review Report. This report provides limited assurance that the accountant is not aware of any material modifications that should be made to the financial statements for them to be in accordance with GAAP.

Strengthening Financial Confidence 

Completing a financial statement review is more than a compliance exercise, it’s an opportunity to gain a clearer picture of your organization’s financial standing. The insights you receive can guide better decision-making, support future funding requests, and reinforce the trust of your board and community. 

Regular reviews also help not-for-profits build stronger accounting practices and prepare for potential audits down the road. 

How De Boer, Baumann & Company Can Help 

At De Boer, Baumann & Company, we understand the importance of reliable financial reporting in the not-for-profit sector. Our experienced professionals provide tailored review and assurance services designed to meet your organization’s specific needs. 

From preparing your records and guiding you through the review process to offering recommendations for stronger financial practices, our team is here to help you achieve clarity, confidence, and compliance. Let us help you focus on your mission, while we take care of the numbers. 

Navigating Payroll and Benefits Compliance in Not-For-Profits 

Managing payroll and employee benefits is an essential part of running any organization, but for Not-For-Profits, compliance can be particularly complex. Between balancing limited resources, managing multiple funding sources, and navigating specific labor laws, Not-For-Profit leaders often face unique challenges in ensuring payroll accuracy and regulatory compliance.  Understanding the rules and implementing sound systems helps protect your …

Managing payroll and employee benefits is an essential part of running any organization, but for Not-For-Profits, compliance can be particularly complex. Between balancing limited resources, managing multiple funding sources, and navigating specific labor laws, Not-For-Profit leaders often face unique challenges in ensuring payroll accuracy and regulatory compliance. 

Understanding the rules and implementing sound systems helps protect your organization, your employees, and your reputation, allowing you to stay focused on your mission. 

Why Payroll Compliance Matters 

Payroll errors and compliance issues can lead to significant financial penalties, reputational harm, and even loss of grant funding. Not-For-Profits must comply with the same payroll and employment laws as for-profit entities, while also adhering to additional reporting and documentation requirements tied to restricted funds and grants. 

Strong payroll and benefits management practices help your organization: 

  • Maintain compliance with federal and state labor laws 
  • Ensure proper use of grant and donor funds 
  • Improve employee satisfaction and retention 
  • Reduce administrative errors and audit risks 

When compliance is prioritized, your organization can operate with greater efficiency and confidence. 

Key Areas of Payroll Compliance for Not-For-Profits 

1. Proper Employee Classification 

Accurate employee classification is critical. Misclassifying employees as independent contractors or exempt vs. nonexempt can result in fines and back pay obligations. Review each position carefully to ensure it aligns with the Fair Labor Standards Act (FLSA) and state regulations. 

2. Accurate Wage and Hour Tracking 

Not-For-Profits must comply with federal and state minimum wage laws, overtime requirements, and recordkeeping standards. Implementing reliable time-tracking systems ensures that employees are paid correctly and that required records are properly maintained. 

3. Grant and Program Payroll Allocation 

If your Not-For-Profit receives grant funding, payroll costs may need to be allocated across multiple programs or funding sources. Maintain detailed records showing how employee time and compensation are divided to comply with grant reporting requirements and avoid disallowed costs. 

4. Tax Withholding and Reporting 

Even though Not-For-Profits may be tax-exempt, they are still required to withhold and remit payroll taxes for employees. Stay current with federal, state, and local tax filing deadlines, and ensure all forms, such as W-2s and 1099s, are issued accurately and on time. 

5. Benefits Administration and Compliance 

Offering benefits such as health insurance, retirement plans, and paid leave requires compliance with laws like the Affordable Care Act (ACA) and ERISA. Ensure your benefits programs are administered correctly, and review eligibility and contribution rules annually. 

Best Practices for Managing Payroll and Benefits 

To stay compliant and organized, Not-For-Profits should implement proactive payroll and benefits management strategies. 

Establish Clear Policies and Procedures 

Document payroll policies covering timekeeping, overtime, leave accrual, and expense reimbursements. Clearly communicate these policies to employees and ensure consistent application across all departments. 

Leverage Payroll Technology 

Using payroll software or outsourcing to a reputable payroll provider can simplify tax filings, automate reporting, and reduce human error. Many platforms integrate with accounting systems like QuickBooks, helping Not-For-Profits track payroll expenses by fund or program. 

Conduct Regular Reviews 

Perform periodic internal reviews of payroll processes, classifications, and benefits administration to ensure ongoing compliance. Regular reviews can help identify errors early and prepare your organization for external audits or reviews. 

Stay Informed About Changing Regulations 

Labor and tax laws evolve frequently. Designate a staff member or advisor to monitor updates from the Department of Labor, IRS, and state agencies. Partnering with professionals who specialize in Not-For-Profit compliance can help your organization stay ahead of changes. 

Building Confidence in Compliance 

Payroll and benefits compliance may not be the most visible part of your Not-For-Profit’s work, but it’s one of the most critical. Ensuring accuracy, transparency, and accountability in these areas supports your employees, protects your funding, and reinforces the trust your community places in your organization. 

By building strong systems and partnering with experienced advisors, your Not-For-Profit can manage compliance with confidence, allowing your team to focus on what matters most: making a difference. 

How De Boer, Baumann & Company Can Help 

At De Boer, Baumann & Company, our Client Accounting & Advisory Services (CAAS) team works closely with not-for-profit organizations to navigate complex payroll, benefits, and compliance requirements with confidence. We provide practical payroll consulting, internal control support, and ongoing accounting services designed to promote accuracy, consistency, and regulatory compliance.

Whether you’re implementing a new payroll system, managing multiple grants, or reviewing benefits administration, our CAAS professionals help strengthen your processes and reduce risk. With the right systems and support in place, your team can spend less time on compliance concerns and more time advancing your mission.

 

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Building Your Farm’s Professional Advisory Team

Running a successful farm requires more than strong production skills. It also depends on having the right people around you to support decision making, protect the business, and help you plan for the future. A well-built advisory team allows you to focus on farming while trusted professionals handle the areas that demand specialized expertise. …

Running a successful farm requires more than strong production skills. It also depends on having the right people around you to support decision making, protect the business, and help you plan for the future. A well-built advisory team allows you to focus on farming while trusted professionals handle the areas that demand specialized expertise.

No two farms need the exact same team, but the most effective operations intentionally surround themselves with advisors who understand agriculture and work toward shared goals.

Understanding the Roles on Your Team

Every farm relies on a mix of contributors who move the business forward and protect what has been built. Some advisors focus directly on profitability and production, while others play a critical role in managing risk and long-term stability.

Operational advisors often include lenders, agronomists, nutritionists, marketing professionals, seed and chemical representatives, veterinarians, and production employees. Their work directly affects yields, efficiency, and cash flow.

Protective advisors help safeguard the business and family. These typically include accountants, attorneys, insurance providers, succession planners, and trusted service professionals. While their impact may be less visible day to day, their role is essential to preserving assets and preventing costly mistakes.

In addition to formal advisors, many farms rely on a broader support network that includes family members, Extension specialists, mentors, neighbors, and peer producers. These relationships often provide perspective and practical insight when it matters most.

Finding the Right Fit Matters

The value of an advisory team depends on how well its members align with your operation and goals. Credentials alone are not enough. Advisors must understand agriculture and be willing to engage with your specific challenges.

Many producers discover that an advisor who served a previous generation well may not be the best fit for the next phase of growth. As operations expand, take on more risk, or change structure, their advisory needs naturally evolve. Reassessing your team is not a sign of disloyalty; it is a necessary step in managing a sophisticated, growing business.

Strong advisors communicate clearly, return calls, ask thoughtful questions, and show confidence in your vision. They should challenge assumptions when needed and support informed decision making rather than simply reacting to problems.

The Time Saving Value of a Strong Team

One of the most overlooked benefits of a well-built advisory team is time. When responsibilities are clearly delegated and supported by capable professionals, owners gain both mental space and hours in the day.

Clear systems, shared platforms, and proactive communication reduce last minute stress. Tax planning becomes less disruptive. Legal and financial issues are addressed before they become urgent. Equipment breakdowns, labor challenges, and operational risks are managed more efficiently because the right people are already in place.

This support is especially important for multi-generational operations where responsibilities are shared among family members and employees. A strong team helps prevent burnout and allows the business to function smoothly even during peak seasons.

Making Sure Advisors Are Aligned

A common challenge in farm operations is working with advisors who operate independently without coordination. Financial plans, legal documents, lending structures, and succession strategies may each make sense on their own but fail to work together.

Alignment across advisors is critical. When your accountant, attorney, and lender are not communicating, gaps and conflicts can emerge. Coordinated planning helps ensure decisions support both short-term operations and long-term goals.

Having a central point of coordination, whether that is an internal leader or a trusted advisor, helps keep everyone focused on the same objectives and reduces the risk of conflicting strategies.

Knowing When to Make a Change

If a professional relationship is not working, it is important to recognize that you are the client. Advisors are there to serve the goals of the farm. If communication is poor, understanding is lacking, or progress feels stalled, it may be time to seek a second opinion or make a change.

Moving on from an advisor does not require conflict. Often, it simply reflects a shift in needs or direction. Giving yourself permission to adjust your team helps ensure the business remains supported as it grows and changes.

Building And Maintaining Your Roster

Recommendations from trusted peers, lenders, and current advisors are often the best way to find new team members. Asking who has helped others navigate similar situations can lead to better matches than asking general questions about who is “good” at their job.

Technology has also expanded access to specialized expertise. Geographic location is no longer a barrier to working with professionals who understand agriculture and your specific challenges.

Once your team is in place, regular check-ins help keep everyone aligned. Reviewing goals, updating plans, and evaluating progress ensures advisors remain focused on supporting the direction of the farm rather than reacting to isolated issues.

How De Boer, Baumann & Company Can Help

Strong advisory teams do not form by accident. They are built intentionally around the goals and structure of the operation. De Boer, Baumann & Company works with agricultural producers to coordinate financial planning, tax strategy, succession planning, and long-term decision making. Our team helps connect the dots between advisors so farm owners can move forward with clarity and confidence.

To read the full article by Lisa Foust Prater, please visit https://www.agriculture.com/draft-your-farms-professional-dream-team-8708459.

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Factoring Living Expenses Into Farm Compensation Planning

As farm families review year-end financials and prepare for another season, compensation conversations often rise to the surface. Wages, salaries, and major capital investments tend to get the most attention. One area that is frequently overlooked, however, is family living expenses. While these costs may seem modest compared to land, equipment, or operating inputs, …

As farm families review year-end financials and prepare for another season, compensation conversations often rise to the surface. Wages, salaries, and major capital investments tend to get the most attention. One area that is frequently overlooked, however, is family living expenses.

While these costs may seem modest compared to land, equipment, or operating inputs, they can significantly affect cash flow and profitability, especially when multiple families rely on the business for support. When living expenses are not clearly understood or documented, they can also become a source of tension within family operations.

 

Why Living Expenses Matter More Than You Think

Family living expenses often flow through the farm business in ways that are not always obvious. Housing, utilities, vehicles, insurance, and other benefits may be paid by the operation and deducted for tax purposes. While these arrangements can be tax efficient, they can also blur the line between compensation and business expenses.

When these costs are not clearly identified, it becomes difficult to answer a basic question: what is each person actually living on? Without that clarity, compensation discussions are incomplete and comparisons between roles can feel unfair, even when no one intends them to be.

Understanding the full cost of supporting family members through the business is an important step toward more transparent financial planning.

 

Separating Compensation From What the Business Can Afford

In many family operations, compensation discussions get tangled with concerns about cash flow. Rather than setting compensation based on the value of the work being performed, families often ask what the business can afford in a given year.

In a nonfamily business, compensation decisions are typically made based on market value for a role. If the business cannot afford that cost, staffing changes are considered. Family businesses rarely operate this way. Instead, they often reduce pay, defer compensation, or rely on operating loans to cover gaps. Over time, this can lead to resentment and confusion, especially if expectations are not clearly communicated.

Developing a formal compensation plan helps shift the focus from short-term affordability to long-term sustainability and fairness.

 

Accounting for Hidden Compensation

Many farms provide benefits that function as compensation but are not always recognized as such. Housing, vehicles, insurance coverage, meals, or even animal boarding can represent a significant portion of an individual’s total compensation package.

When these benefits are not quantified, individuals may underestimate what they are receiving from the business. A role that appears to pay a modest salary may actually provide a much higher level of total compensation once these benefits are considered.

Quantifying both wages and benefits allows families to see the full picture. It also provides a foundation for addressing perceived inequities and making informed adjustments.

 

Building a Market-Based Compensation Plan

A strong compensation plan often starts with a market-based assessment. Consider what a similar role would command if the farm had to hire a nonfamily employee. This approach helps establish a fair baseline for labor and management compensation.

Once total compensation is defined, benefits can be allocated based on individual circumstances. One family member may need health insurance through the farm, while another may receive coverage elsewhere. Flexibility within the compensation structure allows benefits to be adjusted while maintaining overall fairness.

Clear documentation ensures everyone understands how compensation is determined and what it includes.

 

Separating Returns to Labor From Returns to Ownership

Another common challenge in family farms is distinguishing between compensation for work performed and returns generated by ownership. Without clear policies, profits may be distributed unevenly or used to supplement wages in strong years, only to be reduced when conditions change.

Establishing a policy that prioritizes fair, competitive compensation first helps create consistency. Profits earned beyond compensation can then be distributed based on ownership interests. This separation supports more stable planning and reduces emotional decision making tied to short-term performance.

Clear distinctions are especially important as farms bring in the next generation or involve multiple family branches.

 

Establishing Expense And Reimbursement Policies

Expense management is another area where clarity matters. Personal expenses can easily be buried in operating categories, whether intentionally or unintentionally. Over time, this practice distorts financial reporting and complicates compensation discussions.

Clear policies should define which expenses may be charged to the business and how reimbursements are handled. Regular review of expenses encourages accountability and promotes more disciplined spending.

Some farms benefit from structured discussions around expenses, while others rely on documented policies and periodic reviews. The right approach varies, but consistency is key.

 

Having The Right Conversations At The Right Time

Discussions about compensation and expenses are not easy, but avoiding them creates greater risk over time. These conversations are best handled intentionally, separate from holidays or emotionally charged family gatherings.

Trusted advisors can play an important role in these discussions. Accountants and lenders bring objectivity and financial insight that can help families evaluate options and make informed decisions grounded in data rather than assumptions.

 

How De Boer, Baumann & Company Can Help

Compensation planning in family farm operations requires more than setting wages. It involves understanding living expenses, valuing benefits, separating ownership returns, and aligning policies with long-term goals. De Boer, Baumann & Company works with agricultural producers to develop clear, practical compensation and expense structures that support fairness, transparency, and financial sustainability.

To read the original article by Katie Micik Dehlinger, please visit https://www.dtnpf.com/agriculture/web/ag/news/article/2025/12/01/hidden-benefits.

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A Conversation Is Not a Contract: Why Farm Succession Plans Must Be Put in Writing

Many farm families talk openly about the future. They discuss who will run the operation, how responsibilities will shift, and what retirement might look like for the senior generation. These conversations are important, but they are not enough. Without written agreements and legal documentation, even the best intentions remain uncertain. A farm succession plan …

Many farm families talk openly about the future. They discuss who will run the operation, how responsibilities will shift, and what retirement might look like for the senior generation. These conversations are important, but they are not enough.

Without written agreements and legal documentation, even the best intentions remain uncertain. A farm succession plan that exists only in conversation leaves too much room for misunderstanding, delay, and conflict. For the next generation, that uncertainty can become a significant source of stress.

 

When Responsibility Grows but Certainty Does Not

In many family farm operations, the next generation gradually takes on more responsibility. They manage day-to-day operations, oversee production decisions, and help stabilize the business so the senior generation can step back. Over time, this shift often allows parents to travel more, reduce stress, and enjoy life beyond the farm.

The challenge arises when increased responsibility is not matched with clarity about the future. Assumptions replace assurances. Verbal comments like “you’re doing great,” “we will take care of it,” or “that sounds fair” feel encouraging, but they do not define ownership, authority, or timelines.

As years pass, uncertainty grows. The next generation may wonder what their long-term role will be, how assets will transition, and whether their commitment is truly recognized. Strong working relationships can mask these concerns until frustration quietly builds.

 

Why Verbal Agreements Fall Short

Families often avoid formal planning because conversations feel easier than documentation. Topics like ownership transfer, compensation, and estate planning can feel uncomfortable, especially when relationships are positive.

The problem is that verbal alignment does not guarantee shared understanding. People may interpret the same conversation very differently. What sounds like agreement to one person may feel like a loose idea to another.

Without written documentation, expectations remain untested. Decisions are delayed. When a triggering event occurs, such as illness, death, or burnout, the lack of clarity can quickly turn into conflict. In many cases, this is when farms are divided, sold, or lost entirely.

 

What Successful Transitions Have in Common

Farms that transition successfully do not rely on assumptions. They take the time to document how the business operates today and how it is expected to operate in the future. With family, more clarity is required, not less.

Written plans help protect relationships by removing ambiguity. They provide a shared reference point and create accountability for follow through. Most importantly, they give the next generation confidence that their future is being taken seriously.

 

Key Items That Should Be Documented

A comprehensive succession plan typically includes clear documentation across multiple areas of the business:

  • Ownership documents such as titles, deeds, and asset records

  • Business structure documentation for corporations, LLCs, or partnerships, including operating and organizational agreements

  • Exit strategies, including buy-sell agreements and transfer provisions

  • Leases and contracts tied to land, equipment, or facilities

  • Compliance and regulatory documentation

  • Defined signature authority and decision-making responsibilities

  • Accurate meeting minutes and formal records

  • Core business documents such as mission statements, goals, standards, and financial reports

  • Conflict resolution processes

  • Employee documentation including job descriptions, compensation, and benefits

  • A written succession plan outlining leadership and ownership transition

  • Estate planning documents when individually-owned assets affect business continuity

Each of these elements helps ensure the farm can continue operating smoothly while ownership and leadership evolve.

 

Starting the Conversation the Right Way

When relationships are strong, the next generation has earned the right to ask meaningful questions about the future. Asking for clarity is not a sign of impatience or entitlement. It is a necessary step in protecting both the business and the family.

Setting aside dedicated time to discuss concerns and expectations can help move conversations into action. Written plans do not need to answer every question immediately, but they should establish direction, structure, and next steps.

 

How De Boer, Baumann & Company Can Help

Farm succession planning involves more than estate documents. It requires alignment between ownership, management, tax planning, and long-term business goals. De Boer, Baumann & Company works with farm families to bring structure and clarity to succession planning conversations. Our team helps clients document expectations, evaluate financial impacts, and build practical plans that support continuity while preserving family relationships.

To read the original article by Jolene Brown, please visit https://www.agriculture.com/a-conversation-isn-t-a-contract-put-your-farm-succession-plan-in-writing-11825340

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Getting Farm 1031 Exchanges Right

Section 1031 exchanges continue to be a common planning tool for agricultural producers, particularly as land sales tied to solar projects, data centers, and inherited property increase. While many 1031 exchanges follow a familiar structure, farmland introduces unique considerations that can complicate the process if not addressed early. A 1031 exchange can offer meaningful …

Section 1031 exchanges continue to be a common planning tool for agricultural producers, particularly as land sales tied to solar projects, data centers, and inherited property increase. While many 1031 exchanges follow a familiar structure, farmland introduces unique considerations that can complicate the process if not addressed early.

A 1031 exchange can offer meaningful tax deferral opportunities, but it is highly rule driven. Understanding the nuances specific to agricultural land is essential to avoiding costly missteps.

What Is a Section 1031 Exchange?

Section 1031 of the Internal Revenue Code allows taxpayers to defer capital gains taxes by exchanging qualifying property used in a trade or business or held for investment for another like-kind property. The IRS defines like-kind as property of the same nature or character, even if it differs in grade or quality.

For real estate, this definition is broad. Improved and unimproved real property generally qualifies as like-kind, making farmland eligible for exchange into other real property used for business or investment purposes.

Why Farm 1031 Exchanges Are More Complex

Agricultural land is rarely just land. A typical farm property may include buildings, irrigation or tiling systems, a personal residence, and associated water or mineral rights. Each of these components can carry different tax classifications, which affects how they must be treated within a 1031 exchange.

Another common complication in agriculture is related party transactions. Family-owned operations often involve exchanges between relatives or commonly owned entities, which triggers additional IRS scrutiny and stricter compliance requirements.

Understanding Asset Class Treatment

Farm properties often consist of multiple asset classes, each with its own exchange rules.

Land is generally the most straightforward. It can be exchanged for other qualifying real property on a tax deferred basis, provided all net proceeds and cash are reinvested in the replacement property.

Section 1250 property includes buildings other than certain livestock or storage facilities. These assets must be exchanged for equal or greater Section 1250 property to maintain tax deferral.

Section 1245 property includes certain depreciable assets tied to the operation. To qualify for tax free treatment, these assets must be exchanged for equal or greater Section 1245 property. It is important to note that personal property such as tractors or vehicles no longer qualifies as like-kind property for 1031 purposes.

Properly allocating value among these asset classes is critical, as an error can result in unexpected taxable gain.

The Role of Debt in a 1031 Exchange

Debt is another key factor that can affect the success of a 1031 exchange. If the relinquished property carries debt, the replacement property must generally have equal or greater debt to avoid triggering taxable boot.

This requirement often necessitates early conversations with lenders. In some cases, debt may need to be restructured or refinanced to align with the exchange rules. Addressing financing before the sale closes helps prevent delays or disqualification later in the process.

Timing Rules You Cannot Miss

Timing is one of the most rigid aspects of a 1031 exchange. Once the relinquished property is sold, the taxpayer has 45 days to identify potential replacement properties. The exchange must be fully completed within 180 days of the original sale.

During this period, sale proceeds must be held by a qualified intermediary. The taxpayer cannot access or control the funds at any point during the exchange. Missing a deadline or improperly handling funds can cause the entire transaction to become taxable.

Replacement Property Identification Rules

When identifying replacement property within the 45 day window, taxpayers must follow specific identification rules.

Under the three property rule, up to three potential replacement properties may be identified regardless of their value.

Under the 200 percent rule, any number of properties may be identified as long as their combined fair market value does not exceed 200 percent of the relinquished property.

Selecting the appropriate identification strategy depends on market conditions, availability of land, and the overall exchange plan.

Special Considerations for Related Party Exchanges

Related party 1031 exchanges are subject to additional restrictions. Related parties include family members, commonly owned entities, and certain trusts. These transactions are closely reviewed by the IRS due to the potential for abuse.

When a 1031 exchange involves a related party, neither party may dispose of the acquired property within two years. If this rule is violated, the deferred gain becomes taxable. Proper documentation is also critical. Transactions should be conducted at fair market value and structured as arm’s length arrangements to reduce audit risk.

Planning Ahead Matters

While 1031 exchanges are often described as straightforward, agricultural exchanges rarely are. The combination of multiple asset classes, financing considerations, timing rules, and family involvement increases the margin for error.

Producers considering a 1031 exchange should involve their advisory team early. Careful planning helps ensure the exchange achieves its intended tax deferral and supports broader operational and succession goals.

How De Boer, Baumann & Company Can Help

Section 1031 exchanges require careful coordination between tax planning, transaction structure, and long term business strategy. De Boer, Baumann & Company works with agricultural producers to evaluate exchange opportunities, identify risks, and navigate the technical requirements specific to farmland transactions. Our team helps ensure exchanges are structured properly and aligned with your broader financial and succession plans.

To read the original article by Rod Mauszycki, please visit https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2025/12/03/get-farm-1031-exchange-right.

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Supporting Generational Transitions in Farm and Ranch Operations

Generational transitions are some of the most consequential moments in the life of a farm or ranch. These changes go far beyond ownership paperwork or management titles. They influence daily decision making, long-term strategy, family relationships, and the financial stability of the operation for years to come. While every transition is different, many challenges …

Generational transitions are some of the most consequential moments in the life of a farm or ranch. These changes go far beyond ownership paperwork or management titles. They influence daily decision making, long-term strategy, family relationships, and the financial stability of the operation for years to come.

While every transition is different, many challenges stem from the same source. Multiple generations bring valuable but different strengths to the business. When those strengths are not intentionally aligned, frustration and uncertainty can follow. When they are, the operation is often better positioned for continuity, growth, and resilience.

Understanding how each generation contributes is a critical starting point for a successful transition.

Recognizing the Strengths of Each Generation

Senior generations bring decades of experience shaped by market cycles, weather volatility, equipment challenges, labor issues, and lender relationships. They understand which decisions carry lasting consequences and where risks tend to surface over time. This depth of knowledge provides valuable perspective when evaluating opportunities and navigating uncertainty.

Younger generations often contribute energy, adaptability, and comfort with technology and data-driven decision making. They are typically more open to new tools, evolving production methods, and operational efficiencies. Their ability to learn quickly and challenge long-standing assumptions can reveal opportunities for improvement and long-term sustainability.

Both perspectives are essential. Challenges often arise when expectations around decision making, authority, and communication are unclear.

Creating Space for the Next Generation to Lead

One of the most common transition challenges occurs when senior generations remain deeply involved in every operational decision. While this involvement is often rooted in responsibility and care for the business, it can unintentionally limit the confidence and development of the next generation.

Allowing younger family members space to solve problems is essential. That may involve stepping away from daily operations periodically or intentionally allowing others to manage issues as they arise. This space creates opportunities for learning, accountability, and leadership growth.

It is also important to resist the urge to correct every mistake. Not every issue requires immediate intervention. In many cases, lessons learned through experience are far more valuable than guidance given too early. A practical approach is to step in only when a decision presents a significant financial or operational risk.

Financial structure can also influence how easily senior generations step back. When personal income depends entirely on operating profits, releasing control becomes more difficult. Separating income through land rent, equipment rent, or retirement resources can provide greater flexibility during the transition.

Supporting the Senior Generation Through Change

Transitions affect both sides. For senior generations, stepping away from a business built over decades represents a major life shift. Supporting that change requires clarity, respect, and open communication.

Younger leaders should clearly define where they want input and involvement. This helps avoid confusion and reduces overlap in authority. Asking for guidance in specific areas, such as lender relationships, land negotiations, or production planning, allows experience to be shared productively without undermining leadership roles.

Encouraging senior generations to teach, document, and share institutional knowledge is also valuable. Many farms rely on unwritten processes and historical insight that can be difficult to replace. Capturing that knowledge supports continuity and reduces risk during and after the transition.

Equally important is encouraging meaningful activities outside of daily operations. Community involvement, mentoring, industry boards, family time, or personal projects can help maintain a sense of purpose while supporting a healthy transition away from day-to-day management.

Aligning Expectations Early

Many transition challenges arise from assumptions that are never discussed. Who makes final decisions? How are profits distributed? What does the long-term vision look like? Addressing these topics early creates clarity and reduces the risk of conflict.

Formal transition planning helps structure these conversations. Ownership arrangements, management responsibilities, compensation, and timelines should be clearly documented and reviewed regularly. Planning does not eliminate flexibility, but it does create shared understanding and alignment.

Professional advisors can play an important role in facilitating these discussions. A neutral perspective helps families evaluate financial implications, identify risks, and model outcomes before challenges arise. Thoughtful planning supports both the business and the relationships behind it.

Building a Stronger Future Together

A successful generational transition does not happen by chance. It requires trust, patience, and intentional collaboration from all involved. When senior and younger generations align their strengths and expectations, farms and ranches are better positioned to remain financially sound and operationally strong for generations to come.

How De Boer, Baumann & Company Can Help

Generational transitions involve complex financial, operational, and family considerations. De Boer, Baumann & Company works closely with agricultural producers to provide guidance through ownership transitions, management changes, and long-term planning. Our team helps bring structure and clarity to the process so families can make informed decisions that support continuity, financial stability, and lasting success.

To read the original article by Lance Woodbury, please visit https://www.dtnpf.com/agriculture/web/ag/news/article/2025/12/01/supporting-generational-transitions.

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Employee Spotlight: Cody Simons

Since joining De Boer, Baumann & Company as an intern during the 2022 tax season, Cody Simons has steadily built a foundation rooted in hard work, resilience, and a genuine commitment to growth. What began as an internship quickly turned into a full-time opportunity, allowing Cody to continue developing his skills while completing his …

Since joining De Boer, Baumann & Company as an intern during the 2022 tax season, Cody Simons has steadily built a foundation rooted in hard work, resilience, and a genuine commitment to growth. What began as an internship quickly turned into a full-time opportunity, allowing Cody to continue developing his skills while completing his education and fully immersing himself in the profession.

Cody attended Grand Valley State University, earning his Bachelor of Business Administration with an emphasis in Accounting and Finance in December 2022. After graduation, he chose to step directly into a full tax season to gain hands-on experience before returning to GVSU to complete his Master of Science in Accountancy, which he earned in April 2025. His college journey took place during a uniquely challenging time, navigating academics amid a pandemic. Seeking connection and balance, Cody joined Pi Lambda Phi, a social fraternity that helped him build lasting relationships and a strong sense of community that continues to shape his life today.

Originally born in Lansing and raised in the small town of Bannister, Michigan, Cody credits much of who he is today to his parents, Mike Simons and Val Booth. Their unwavering encouragement, presence at every sporting event, and support throughout his education left a lasting impact. Cody speaks with deep gratitude about the values they instilled in him, noting that everything he has achieved stems from how they raised and supported him.

That strong work ethic showed up early. At just 13 years old, Cody started his first job at a local seed farm, spending summers detasseling corn in all conditions. The work was physically demanding and required perseverance, but it also gave him firsthand insight into farm operations. Those early experiences continue to serve him well today, especially when working with DBC’s agricultural clients.

When busy season winds down, Cody is intentional about recharging. He and his girlfriend have made Friday night date nights a tradition, often enjoying dinner in Grand Rapids or catching a Griffins game at Van Andel Arena. After tax season, they plan an annual trip between May and June to explore a new city and attend a Major League Baseball game. Their long-term goal is to visit every ballpark in the country!

Cody’s journey reflects determination, adaptability, and a strong sense of purpose. We are proud to highlight his growth and the perspective he brings to DBC, shaped by experience, resilience, and a deep appreciation for the people who helped him along the way.

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IRS Announces 2026 Retirement Plan Limit Increases

The IRS has released the updated retirement plan limits for 2026. Several important contribution amounts will rise in the next year. The annual IRA contribution limit will increase to $7,500. For individuals age 50 and older, the IRA catch-up contribution will increase to $1,100. Employees who participate in 401(k), 403(b), governmental 457 plans, or …

The IRS has released the updated retirement plan limits for 2026. Several important contribution amounts will rise in the next year.

The annual IRA contribution limit will increase to $7,500. For individuals age 50 and older, the IRA catch-up contribution will increase to $1,100.

Employees who participate in 401(k), 403(b), governmental 457 plans, or the Thrift Savings Plan will see their annual contribution limit rise to $24,500. The standard catch-up limit for these plans, available to participants age 50 and older, will increase to $8,000.

For 2026, the enhanced catch-up contribution for employees ages 60 through 63 who participate in 401(k), 403(b), and similar employer-sponsored retirement plans will remain at $11,250. This special limit replaces the standard $8,000 catch-up amount for individuals within that four-year age band.

More information is available in IRS Notice 2025-67. If you need assistance understanding how these changes may affect your retirement planning, the DBC team is here to walk you through your options.

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Preparing for 2026–27: What Not-for-Profit Leaders Need to Know About the New Charitable Giving Rules

The passage of the 2025 Reconciliation Act, often referred to as the “One Big Beautiful Bill Act” (OBBBA), introduced sweeping updates to federal charitable giving regulations that will begin taking effect in 2026 and 2027. These changes will have far-reaching implications for not-for-profits, donors, and fundraisers across all sectors. For not-for-profit leaders, now is …

The passage of the 2025 Reconciliation Act, often referred to as the “One Big Beautiful Bill Act” (OBBBA), introduced sweeping updates to federal charitable giving regulations that will begin taking effect in 2026 and 2027. These changes will have far-reaching implications for not-for-profits, donors, and fundraisers across all sectors.

For not-for-profit leaders, now is the time to plan ahead. Understanding the new giving landscape early will help organizations adapt their fundraising strategies, communicate effectively with donors, and safeguard financial stability in the years ahead.

Key Changes to Charitable Giving Rules

A recent report from Arts, Culture, and Media Philanthropic Advisors, titled One Big Beautiful Bill Act and Charitable Giving in 2026: Guidance for Fundraisers, outlines several significant updates that will affect how individuals and corporations give.

Expanded Deduction for Non-Itemizers

Starting in 2026, taxpayers who do not itemize will be eligible for a charitable deduction on cash contributions, up to $1,000 for individuals and $2,000 for joint filers. Donations to private foundations and donor-advised funds do not qualify, and these amounts will not be adjusted for inflation. This change reintroduces a version of the universal charitable deduction, designed to encourage everyday donors to give.

Permanent 60 Percent Limit for Individual Cash Gifts

The new law makes permanent the increased deduction limit, 60% of adjusted gross income (AGI), for individuals contributing cash gifts to qualified charitable organizations. This continues a provision that had been temporary under prior legislation, ensuring greater flexibility for generous donors.

New 0.5 Percent Floor for Itemizers

Beginning in 2026, taxpayers who itemize may only deduct charitable gifts that exceed 0.5% of their AGI. In addition, those in the top tax bracket (37%) will receive a slightly reduced deduction value, 35 cents on the dollar rather than 37. While the difference may seem small, this adjustment could influence high-income donors’ giving behaviors.

Tax Credit for Scholarship Contributions

In 2027, a new tax credit of up to $1,700 will be available to taxpayers contributing to eligible scholarship-granting organizations that support students at private or religious K–12 schools. This credit will apply regardless of whether the taxpayer itemizes deductions, creating a new incentive for education-focused giving.

Corporate Deduction Floor Introduced

Corporate charitable giving will also be affected. Beginning in 2026, businesses can only deduct charitable donations that exceed 1% of taxable income, up to a ceiling of 10%. This change could encourage larger or multi-year giving commitments from corporate partners but may also require not-for-profits to adjust their approach to sponsorship and corporate engagement.

What These Changes Mean for Not-for-Profits

The new rules create both challenges and opportunities for not-for-profit organizations. While they may increase participation among smaller, non-itemizing donors, they could also complicate giving strategies for major donors and corporate partners. Strategic planning will be essential to help not-for-profits maintain balance across their donor bases.

1. Engaging Everyday Donors

The reinstated universal deduction for non-itemizers provides an opportunity to engage a wider pool of small donors. Not-for-profits should build fundraising campaigns that highlight how even modest contributions now carry tangible tax benefits. Messaging that connects giving directly to impact, such as “Your $100 gift not only supports our mission but is now tax-deductible”, can inspire participation from new supporters.

The upcoming scholarship tax credit also opens doors for organizations connected to education or youth programs. Communicating this new benefit early can help donors plan ahead and strengthen relationships with supporters interested in education equity.

2. Planning for Itemizers and Major Donors

For high-income donors and those who itemize, the 0.5% deduction floor and top-tier reduction may prompt new giving strategies. Fundraisers should be ready to discuss “bunching”, a method where donors concentrate multiple years of charitable giving into one tax year to exceed deduction thresholds and maximize impact.

Not-for-profits can also encourage legacy giving and planned gifts as donors evaluate long-term financial strategies. With the Act’s increase in estate and gift tax exemptions to $15 million for individuals and $30 million for couples, there’s greater opportunity for philanthropic estate planning that aligns with organizational sustainability goals.

3. Strengthening Corporate Partnerships

The new 1% minimum for deductible corporate giving means businesses will need to contribute at least that share of taxable income to qualify. Not-for-profits should position themselves as strategic partners by proposing multi-year sponsorships, collaborative campaigns, or pooled giving initiatives that help corporate donors meet thresholds while achieving meaningful community outcomes.

This shift may also prompt companies to become more intentional in selecting not-for-profit partners, valuing transparency, measurable results, and mission alignment more than ever before.

Turning Policy Changes into Strategic Opportunity

The OBBBA reforms introduce a mix of opportunities and challenges for the not-for-profit sector. While the expanded universal deduction could increase small-donor giving, the new floors and limits may temper large-scale contributions. Success in this new environment will depend on thoughtful, proactive engagement.

Not-for-profits should begin scenario planning now, reviewing donor data, updating messaging, and educating their supporters about how the rules will affect them. Creating segmented outreach strategies for small donors, major donors, and corporate partners will help organizations adapt smoothly to the evolving landscape.

How De Boer, Baumann & Company Can Help

At De Boer, Baumann & Company, we help not-for-profit navigate the complex intersection of tax regulation, fundraising, and financial strategy. Our team works alongside not-for-profit leaders to understand the implications of legislative changes, model potential impacts, and develop proactive approaches to donor engagement and compliance.

We partner with organizations to ensure they are prepared for what’s next, so they can continue focusing on what matters most: advancing their missions and strengthening their communities.

To read the full article by Timothy J. McClimon, please visit Forbes.

About us

De Boer, Baumann & Company provides professional accounting, tax, and business advisory services to individuals and businesses in West Michigan and the surrounding areas. With expertise in a variety of industries, DBC specializes in comprehensive and innovative solutions to help clients achieve their financial goals.