Nope, it’s not another piece to hand on the wire frame of your tractor. It’s not a marketing ap. A Kidult is a group identified by the toy industry as responsible for 25 percent of its sales. It’s generally gen X adults who are in a cash position to be able to buy items that remind them of their youth when the world was simpler to them. Detailed scale models of spaceships from popular scifi properties, replica dolls and “throwback” clothing all can fall into that category. Clearly, they have placed a value on those items and allocated resources to them even though they likely have limited value to a large swath of the world. They are in a way, making good on hopes and dreams of their youth. Not judging, just identifying.
From a farm operation prospective, a Kidult might be that next generation who hasn’t had to invest enough into the operation and has income and resource to devote to “nice to haves” instead of have to haves. These might be exhibited through a shed full of parade ready 1970s tractors, excessive tool lines, extensive outbuildings, or overpriced animals, or off-road vehicles. See also, jet skis, campers, and snowmobiles.
In some cases, the Kidult is independently wealthy through off farm employment. In those cases, the spends are likely tax planning spends and no harm to the operation really is near. When those spends come out of the operating budget and are made instead of less “flashy” spends (new paint on the Case 1070 or a new hoist?), it’s an item to monitor. When it comes to estate planning, identifying who might “Kidult” over an old truck, tractor, or other piece of good time memory inducing paraphernalia could go a long way towards reducing lawyer’s profit and keeping harmony in the hayfield.
Equipment Price Swing
I reviewed an appraisal for $1.2 Million of farm equipment dated April 24. The sale was in June. Then end price was $800,000. That’s a large downturn. From an ag law perspective, low price equipment sales may lead to lower lending limits (lenders aren’t overly found on equipment equity lending anyway) and lead to losses if the item is sold for less than its remaining basis. It does represent an opportunity for cash buys of good equipment that might help the operator stay viable over a period of years when loose credit and low interest rates fade like the Cub’s world series win.
On the other hand, those who have venerated the bonus depreciation and accelerated depreciation sections of the code as gospel will find that even with the lower prices, selling the iron may still result in gain on paper, if not in the pocketbook. The IRS will consider any amount above the remaining non expensed cost of the item as gain, even if the actual cash goes to pay the equipment note. That leaves the farm operator with ghost income and very real tax obligations.
