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Whether you’re a family farm or ranch, large commercial producer or a cooperative, Wipfli can help you mitigate risk and leverage opportunities.
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Wipfli takes a comprehensive approach to our tax offerings, including support for tax-efficient business entity selection, patronage consultation and cash flow planning for cooperatives. We also help you minimize exposure and maximize opportunities with services including tax planning, R&D credits and state and local tax services.
Wipfli’s private client services help you understand the economic and tax consequences of your investment, business structure and wealth transfer strategies. We know the importance of maintaining your family operation, and we can provide comprehensive solutions, including business succession and estate planning support, that meet your multigenerational goals.
Wipfli’s transaction advisory services help maximize your return and create value beyond the deal. We can support you through the full M&A life cycle, including support for buy-side and sell-side M&A, valuations and investment banking.
Wipfli goes beyond assurance to help you find ways to strengthen your operations. Our audit and accounting services include audit solutions for cooperatives, financial statement preparation and optimal accounting method selection. Our advisors also deliver insights and actionable recommendations for improving your processes.
Wipfli’s organizational performance services can help you address the barriers limiting your growth. Whether you need to create a vision for your business, implement lean process improvement or eliminate waste, our team can help you develop and execute more effective strategies. We also offer senior leadership and executive coaching to help your promising leaders reach their full potential.
Modernize your operations with support from Wipfli’s digital team. We help you develop a digital strategy and adopt solutions to deliver greater insights and efficiency, such as enterprise resource planning systems. We can also help you manage your data so that you can leverage data analytics and AI while building a robust cybersecurity plan to keep data secure.
Effective risk management is crucial to maintaining profitability in a challenging business environment. Wipfli’s multidisciplinary risk advisory team can help you navigate risk and compliance effectively with support for critical areas, including internal controls, fraud investigation and operational risk management.
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Insights and resources
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Legacy soil fertility deduction: A farmland tax guide
When farmland or ranchland changes hands, buyers often focus on the value of the land itself. However, many agricultural properties contain a significant amount of residual soil fertility accumulated over years of fertilizer applications. The legacy soil fertility deduction (also known as the excess soil fertility deduction) allows a portion of the purchase price attributable to that fertility to be separated from the land and deducted, resulting in valuable tax savings for farmers. What is legacy soil fertility? Soil fertility represents the nutrients available in the soil, such as phosphorus, potassium and other elements that support crop and grassland production. When agricultural land is purchased that contains nutrient levels above what would normally be expected, a portion of the purchase price may be attributable to those nutrients rather than the land itself. Unlike land, which generally cannot be depreciated, legacy soil fertility is considered a wasting asset. As crops utilize those nutrients, the value declines. Because of this limited life, the cost attributable to excess fertility may be amortized and deducted over a period of years, or potentially all in the year of purchase. What is the benefit of the legacy soil fertility deduction? The primary benefit of a legacy soil fertility deduction is straightforward: Accelerated tax deductions without spending additional cash. Instead of allocating the entire purchase price to non-depreciable land, the purchaser may be able to allocate part of the cost to excess soil fertility and recover that amount through deductions. Potential benefits include: Lower taxable income during the amortization period Improved after-tax cash flow Better return on agricultural land investments A more accurate reflection of the assets acquired in a land purchase For large tracts of highly productive land, the legacy soil fertility component can be substantial, making the tax savings meaningful. What is a soil fertility study? A soil fertility study is typically performed by a qualified agronomist or soil scientist. The analysis compares actual nutrient levels to normal levels for the area. The study seeks to determine: The amount of nutrients present is higher than normal levels The replacement cost of those nutrients The value attributable to excess fertility at the acquisition date The resulting value becomes part of the overall purchase price allocation. When should a soil fertility study be conducted? An excess soil fertility study may be particularly valuable when: Purchasing highly productive cropland Acquiring land that has received significant fertilizer applications Buying irrigated ground with historically intensive crop production Purchasing larger tracts where even a small fertility adjustment can create significant deductions The potential deduction often increases when commodity prices and fertilizer costs are high because the replacement value of nutrients becomes more substantial. The best time to evaluate excess soil fertility is before or shortly after acquiring farmland. Waiting too long may make it more difficult to document nutrient levels that existed at the time of purchase. However, it’s not impossible. You may be able to go back multiple years to take missed deductions with the right testing and analysis. Agricultural land purchasers will need to work with their tax advisor and a qualified soil fertility specialist to determine whether a study is appropriate. In many situations, the cost of the analysis is small compared to the potential tax benefit. A legacy soil fertility deduction scenario Assume a farmer purchases 1,000 acres of cropland for $4,000,000. A soil fertility analysis determines that the property contains residual phosphorus and potassium levels significantly above normal agronomic levels. The study concludes that $1,000,000 of the purchase price is attributable to excess soil fertility. Without an allocation: Land basis: $4,000,000 Annual deduction: $0 Tax benefit: None from the land purchase With an excess soil fertility allocation: Land basis: $3,000,000 Excess soil fertility basis: $1,000,000 The $1,000,000 may be amortized over its allowable recovery period, generating annual deductions, or potentially all deductible in the year of purchase. If the farmer is in a combined federal and state tax bracket of 30%, every $10,000 of annual deduction could reduce tax liability by approximately $3,000. Over the recovery period, the deductions can produce $300,000 in tax savings without any additional cash outlay. The four steps to claiming a legacy soil fertility deduction Farmers, ranchers or agribusinesses that want to claim a legacy soil fertility deduction should follow these steps: Buy farmland: Part of the purchase price may be for nutrients already in the soil, not just the dirt itself. Conduct a soil fertility study: A qualified agronomist analyzes soil tests and determines whether the property contains nutrient levels above normal. Allocate part of the purchase price to excess fertility: Instead of assigning 100% of the purchase price to non-depreciable land, a portion is assigned to the excess nutrients. Claim tax deductions: The allocated fertility value can be recovered through tax deductions over its allowable recovery period, reducing taxable income and improving cash flow. The Legacy Soil Fertility Deduction is a valuable yet often overlooked tax-planning opportunity for farm and ranch land buyers. By identifying and valuing nutrients that already exist in the soil, purchasers may convert a portion of an otherwise non-depreciable land investment into a deductible tax expense. Read more Should you undo your 163(j) election? Managing intergenerational wealth with a family office Farm estate planning: Don’t fall off the estate tax exemption cliff
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Could a modern ERP help your food and beverage business become more competitive? Here’s what to know.
Most food and beverage producers still operate on legacy software systems. These systems may have served your business well in the past, but today, they make it harder to track materials, manage inventory and control costs . To solve these and other challenges, more food and beverage companies are turning to modern enterprise resource planning (ERP) systems. An ERP can help your business operate more efficiently and effectively by giving you new capabilities that legacy systems are simply not able to offer. Keep reading to learn more. What is an ERP? An ERP is a software platform that serves as a financial and operational hub for your food and beverage business. It allows you to understand what is happening inside your business and your supply chain so you can make smarter, more proactive decisions. Core ERP functions include accounting, finance, production and warehousing. An ERP also integrates with additional peripheral systems you may already be using, like an MES, EDI or compliance reporting. By linking with peripheral systems, an ERP helps make all of your operations more visible and effective. In the past, many ERP companies didn’t offer support for batch manufacturing. But that’s changed, with a wide range of ERP solutions now available that can help food and beverage producers leapfrog decades worth of tech-based or operational problems. How does implementing an ERP benefit food and beverage businesses? An ERP is a foundational software tool that helps a business operate more efficiently and effectively. But for food and beverage producers, specifically, it can also offer a competitive edge, because so many of your peers are still operating on older systems. Here are key benefits you could see from an ERP transformation: 1. Operational visibility A modern, cloud-based ERP gives you clear visibility into what’s happening inside your business. This includes not just your financials but also your production process, as your ERP can share data with your manufacturing execution system (MES) to give you a big-picture perspective on your production lines. As a result, your decision makers gain more real-time clarity into key questions like which of your products are most profitable, and that can help your business adapt to meet today’s challenges. 2. Work more efficiently An ERP can dramatically speed up many of your older manual or spreadsheet-based processes. For example, your team may currently be manually collecting data from peripheral systems and putting it into spreadsheets for analysis and reporting purposes. An ERP can automate that entire process, freeing up your team to focus on higher-level work. 3. Better cost controls Older systems typically only offer insight into standard and average costs. A new ERP also allows you to account for additional costs like supply chain disruptions, one-time expenses and climate or weather-related issues. You’ll also be able to more rigorously look for ways to cut down on waste in the production process. 4. Easier training Legacy systems make onboarding new team members harder because those systems have often been patchworked together over decades. Training new employees on a modern ERP allows for faster, more standardized onboarding. It also insulates your business against risks like losing the one employee who understands how your legacy accounting system actually works. 5. Integrated systems A new ERP makes all of your systems more effective because it helps serve as a hub for your peripheral systems. This allows you to bring together data much more quickly, rather than having to painstakingly pull it from each individual peripheral system, and it also makes you better able to take advantage of AI , which needs all that data to operate effectively. 6. Competitive advantage Most food and beverage producers are still running on legacy systems. If you migrate to an ERP while your competitors are still operating on decades-old software and spreadsheets, you will be digging with a backhoe while your peers are relying on shovels. 7. Happier team New systems allow your team members to avoid monotonous, time-consuming tasks. They also help you streamline your workflows, making for a better work experience for your team as a whole. 8. Experimentation Better tracking capabilities make it easier to experiment with new product ideas. You’ll be able to more quickly assess the performance of various product tests to decide if an experiment is paying off. 9. Avoid product shortages New ERPs dramatically improve your materials tracking and inventory management capabilities. This helps you avoid production slowdowns and keep shelves full of your products. 10. Simplified recall and compliance Many food and beverage companies are still handling recalls and other key compliance tasks out of spreadsheets. A modern ERP allows you to largely automate this process, quickly notifying stakeholders, tracking affected batches and more. How do you successfully migrate to a new ERP for your food and beverage business? Food and beverage CFOs and operational leaders considering an ERP migration should focus on how an ERP can help solve specific business problems. Here are key steps to a successful upgrade process: 1. Know thyself Start from a place of curiosity. You may have been running on the same systems for a decade or more. So, what new options are out there? Learn more about what modern ERPs can deliver. Then think about specific processes within your business that a new ERP could help improve. Take the time to dive in and understand how your business works right now so you can assess whether an ERP would allow you to operate more effectively. What specific business problems could an ERP help you solve? 2. Consult an advisor Once you have specific ideas about how you could use an ERP to improve your existing processes, pull in an advisory firm. Talk with your advisor about what you want to change within your business. Your advisor can help you weigh different ERP options to make sure your systems align with your needs. Look for an advisory firm that understands both enterprise tech and the food and beverage business. 3. Consider food-specific factors in potential ERPs Food and beverage businesses need specific features from an ERP. Be sure any options you are considering include capabilities like compliance, traceability, shelf life and ingredient blending, not just a generic pledge that they work for food companies. 4. Think about nonfood-specific factors as well Also consider nonfood-specific elements when choosing an ERP. Factors like purchasing, accounting, tracking profitability and managing vendor or supplier relationships all matter. A good ERP will fit your business holistically. 5. Factor in whether an ERP can be tailored Even the best ERP options probably won’t offer everything you need off the shelf, so learn more about whether your potential ERP options can be tailored, if needed. This can allow you to account for elements like protecting recipes or other trade secrets that you don’t want exposed on public cloud servers or shared with AI. Read more Why are manufacturers missing out on the 179D tax deduction? AI disruption is coming for manufacturing. How should your firm adapt? Can the qualified production property rule help your manufacturing firm reduce tax payments?
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Are outdated core systems blocking your food and beverage company from growth? Here’s what CFOs should watch for.
Food and beverage producers frequently rely on legacy software or even manual systems to run their businesses. But could those systems be an obstacle to growth that’s hiding in plain sight? Legacy systems make it harder for producers to operate efficiently. Aging core systems can also stymie executives trying to understand their costs and adapt to changing market demands. Keep reading to learn more about how food and beverage producers are currently running their businesses and when it might be time to consider a more modern approach. What core systems are food and beverage producers currently using? Some food and beverage producers are running their businesses on modern enterprise resource planning (ERP) and manufacturing execution systems (MES). But most firms are still using legacy systems, which often consist of basic accounting software and a simple production system, with spreadsheets to paper over the gaps. Food manufacturers doing under $40 million in annual revenue almost always operate on legacy systems. Mid-market firms in the $40-$100 million range typically have more complex tools for inventory management and purchase planning but may still use spreadsheets for compliance reporting and recall actions. Even producers with a certain amount of sophisticated operational software are still typically using software that is 10-15 years old, in part because for many years, ERP companies didn’t offer solutions that supported batch production. But as the business climate grows ever faster and more complex, is running on legacy software and spreadsheets still serving your business? What are the warning signs that your core systems may be out of date? Legacy accounting software and production systems could be slowing down your business. Look for key warning signs like limited ability to track raw materials, poor inventory management, inflexible cost control tools and poor traceability. Here are key indicators that your food and beverage business may be taking a hit because of legacy systems: Difficulty tracking raw materials: You need to be able to plan and track your raw materials to avoid a production outage. If you’re having trouble keeping your products on shelves, poor materials tracking capabilities could be a major bottleneck. Labor shortages: Older systems don’t cause labor shortages, but they do make it harder to adapt to them. Legacy systems tend to involve time-consuming, manual processes that take your team members away from higher-value work, straining your team’s capacity and creating burnout. Poor inventory management: Are you wasting time producing products that don’t sell? You may lack the capability to effectively track and prioritize your best-selling products. Limited traceability and recall capabilities: Legacy systems may leave you tracing lots and batches or even managing a recall in spreadsheets. This makes it harder to act quickly to protect your customers. Rigid cost control tools: Older systems typically only show you standard cost and average cost. This makes it hard to get a clear picture of your costs because you can’t fully account for unpredictable or one-time elements like seasonal products, supply chain disruptions and climate or weather events. Trouble integrating newer systems: If you have newer systems in areas like transportation management or compliance, you may be struggling to connect those with your older core systems, making it more difficult to share data between them. This can also make it harder to benefit from newer technologies like AI . The common theme to these warning signs is that you’re not able to quickly and fully understand what’s happening inside your business. You have limited visibility into materials, inventory and costs — making it harder to minimize waste or boost profitability. And your team, from your leadership on down to frontline workers, is forced to act more reactively than proactively, making it tough to pivot or move decisively when needed. What are your next steps? If you see warning signs in your own business that your systems may be blocking your growth or efficiency, consider exploring your options. CFOs and key operational leaders should seek to: 1. Identify specific pain points within your business Look at specific pain points inside your business that are being caused by legacy systems. This will help you drill down on what needs to change. You’ll also get a clearer sense of how a transformation could deliver ROI and concrete operational benefits, which will make it easier to build support among stakeholders. 2. Talk with your team about change Food and beverage producers make vital products that people depend on. This may leave leaders wary of changing existing systems and processes. Have conversations with key team members about change — what it would look like, why it could help your business and how to do it in a way that doesn’t impact production. 3. Consult with an advisor Talk with a third-party advisory firm that understands both modern enterprise systems like ERPs and the unique needs of food and beverage producers. Your advisor can help you map out what’s possible and how a systems migration could deliver concrete business results. 4. Consider your options With your advisor, evaluate different enterprise systems available on the market to determine what makes the most sense for your business. Consider both food-specific elements like the ability to track shelf life, but also broader, nonfood factors like how a new ERP would affect your accounting, purchasing and your broader tech ecosystem. Read more Why are manufacturers missing out on the 179D tax deduction? AI disruption is coming for manufacturing. How should your firm adapt? Can the qualified production property rule help your manufacturing firm reduce tax payments?
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