Based on questions that we have received lately, it appears that leasing is a favorable way of acquiring assets for some of our clients. The decision to lease is based on specifics such as: better financial terms, necessity, the lack of available financing, or just the desire to keep assets off the balance sheet. In any case, whether the lease is treated as an operating lease, the decision should be dependent upon the terms of each individual lease agreement.

For the 2006 filing year, the Internal Revenue Service changed the cooperative tax reporting form from 990C to 1120C. Almost immediately, problems arose. The IRS was not set up to accept tax deposits for form 1120C so the deposits were recorded as 1120. The IRS assured us that they would automatically reclassify 1120 payments to 1120C for all taxpayers that had previously filed form 990C.

The volatility that the market is currently experiencing in regard to handled commodities, grain, fertilizer and fuels will cause us to adapt our audit procedures to match the risks it imposes.

It has been an interesting year for our cooperative clients. Many have enjoyed having their balance sheets, particularly their working capital, shored up with the value of the FC Stone stock. For local earnings though, we have found a mixed bag of results. Many thrived during the last year with tremendous margin improvements in grain and agronomy, although those have been offset to some degree with higher interest expense.