Category: Grape Industry

  • California Fire Damage To Homes Is Less ‘Random’ Than It Seems

    Oakland, Calif., (December 15, 2017) – In the midst of the many wildfire emergencies that have faced California this year, it can often seem that the way houses burn, or don’t, is random.

    Can California update its building codes to minimize fire damage? AP Photo/Jae C. Hong

    The thing is, though, it’s not. Firefighters and researchers alike have a pretty solid understanding of why some houses are more vulnerable to wildfire than others. The real challenge ultimately lies in whether those with the power to act on that knowledge will do so.

    Available science – It is commonly thought that it takes direct flame to spread a fire, but this isn’t always the case. Small embers are instead often the culprits that begin house fires during wildfires. These small bits of burning debris can be lofted long distances by the wind. They can then end up igniting landscaping materials like combustible mulch, or enter homes through vulnerable spots – gutters teeming with debris, unscreened attic vents, open or broken windows, old roofs with missing shingles. Once there, the embers smolder and can ultimately catch a house on fire.

    In California, iconic winds work to create ideal ember-driven ignition conditions. The Santa Ana winds in Southern California – known as the Diablo winds in northern part of the state – have generally followed fairly predictable seasonal and spatial patterns. “Red flag” fire warnings are often issued on dry days when the winds will be particularly fierce.

    While humans can’t really control as much as we’d like to believe when it comes to disasters, we do have the ability to control where and how we build. For decades, most wildfire education and enforcement campaigns have focused on creating so-called defensible space where landscaping vegetation is carefully selected and located on the property, as well as routinely maintained.

    Can California update its building codes to minimize fire damage? AP Photo/Jae C. Hong

    This is not enough, however. Officials in California – as in other fire-prone states – need to help homeowners, local governments and builders to understand there are also specific, science-based steps that can be taken to make structures themselves less vulnerable to fire.

    Researchers recommend what is known as a “coupled approach” to home and building survival. This means the development and maintenance of an effective defensible space, as well as the careful selection of construction materials and correct installation to ensure that, for example, there are not gaps in siding or roofing that would allow embers to penetrate.

    Decision-makers also need to be willing to take on the most taboo topic of them all: recognizing that there are places houses simply shouldn’t be built, or rebuilt, at all.

    (Not) too urban to burn – Earlier this year, California had the first strong winter rains after many years of drought. Now, after a typically dry summer, the state is experiencing a dry start to the rainy season, particularly in the south. At the same time, people have continued to build into places known to burn regularly. The result of this confluence of events has been fires deeply affecting many thousands of people up and down the state.

    California residents are largely aware that not all fire is bad, and that many of our ecosystems thrive on regular fire. It’s not something that we should, or ever could, hope to fully contain. Our only chance is learning, really and truly and finally learning, to live with it.

    In that vein, the state must look long and hard at some of the steps that have been the hardest to take – not building in places that are particularly fire-prone and matching building codes with a modern understanding of wildfire risk – if there is to be any hope of alleviating the human suffering these fires cause.

    We are being invited to free ourselves from the notion that wildfire destruction is random and unpredictable, and that therefore there is nothing to be done about it. As the fire season in California gets longer, the winds worsen and wildfires move into areas once deemed too urbanized to burn, maybe the knowledge about what makes houses burn can finally be put to good use.

    Faith Kearns, Academic Coordinator, California Institute for Water Resources, University of California, Division of Agriculture and Natural Resources

    This article was originally published on The Conversation. Read the original article.

  • Short 2017 Crop Forces Allocation of CA Raisins

    What started off as a short raisin crop this year, got even shorter with high heat and two rainstorms during harvest. At the 105 Annual Meeting of Sun-Maid held in early December, Chairman of the Board Jeff Jue shared that the California raisin industry would be allocating raisins in the coming year due to the the supply and low inventory. Watch Jue’s interview and read more in American Vineyard Magazine.

    Sponsored By:

    Calagnet & YARA

  • Jeff Jue Shares Sun Maid’s Stance on the RAC Referendum

    Growers are voting on a referendum regarding some changed to the terms and conditions of the Federal Marketing Order for Raisins. At the 105th annual meeting of Sun-Maid Growers, Chairman Jeff Jue shared Sun-Maid stance on the Marketing Order and encouraged growers to vote. Watch Jue’s interview and read more in American Vineyard Magazine.

    Sponsored By:

    Calagnet & YARA

  • Best Practices with Doug Gubler for Preventing Trunk Diseases in Grapevines

    As a throwback from American Vineyard’s Central Coast Grape Expo last year, now is the time to prepare our vineyards with the right tools to prevent trunk diseases from spreading in the vineyard. Watch this interview with international expert and emeritus Plant Pathologist at UC Davis Doug Gubler who shared some great insights.

    Sponsored By:

    Calagnet & YARA

  • Tax Relief & Deductions for Wineries this Year

    Q&A with a Winery Tax Expert

    1. What tax relief is available for wineries affected by fires in 2017?

    The IRS has announced that individuals and businesses affected by the fires in California now have until January 31, 2018 to file certain tax returns and make certain payments. There are currently seven counties eligible for relief: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. This list may continue to grow if the disaster continues to spread. Individuals, businesses, as well as visiting firefighters and relief workers, qualify for the extension.

    Individual and business tax filings and payment deadlines that occurred starting on October 8, 2017 have been extended, giving those affected until January 31, 2018 to file returns and pay any taxes originally due during this period. The affected deadlines include:

    • Extension for October 31 deadline for quarterly payroll and excise tax returns
    • Extension for calendar year tax-exempt organizations with 2016 extensions running out on November 15, 2017
    • Waiving of late deposit penalties for federal payroll and excise tax deposits normally due between October 8 and October 23 (if deposits are made by October 23, 2017). Find additional information on the disaster relief page on IRS.gov.
    1. What is the difference between casualty loss and disaster loss?

    These two types of losses overlap. Every disaster loss is also a casualty loss, but not every casualty loss is a disaster loss.

    Disaster Area Losses: a loss that occurred in an area declared by the President to be eligible for federal assistance— usually during a major disaster or emergency. The following website maintains an updated list of the disaster declarations by year and area: https://www.fema.gov/disasters/grid/year

    Casualty Losses: the result of damage, destruction, or loss of property from any sudden, unexpected, or unusual event. This includes flood, hurricane, tornado, fire, earthquake, or volcanic eruption. Some losses due to vandalism, theft and human cause may also qualify. A casualty doesn’t include normal wear and tear or progressive deterioration.

    1. My home is located on my winery and both have been damaged by fire, how will this affect my taxes?

    The amount of loss not covered by insurance should be deductible as casualty losses for both your home and business — the difference is compliance or tax forms. For your home, you can claim casualty losses for any personal property on your individual tax return, Form 1040. Losses from the winery are business related and should therefore be claimed on the business return.

    1. If I donate wine, can I claim it on my tax returns as a charitable contribution?

    Yes, it is characterized as a non-cash donation. The value of the deduction will depend on whether the wine was an inventory item or wine collection. Typically, you will be limited to your cost basis. However, if you donate an inventory item, the amount of your deductible contribution is the fair market value (FMV) of the item minus any gain you would have realized if you had sold the item at its FMV on the date of the donation.

    Note that depending on the value of the donated wine, additional information may be required. If the value of your non-cash donation exceeds $500, but is less than $5,000, you will need to include additional IRS tax forms with your tax return (Form 8283 Noncash Charitable Contributions). If the value of your non-cash donations exceeds $5,000 dollars, you will need to obtain an appraisal report from a qualified wine appraiser, unless it is inventory.

    1. What counts as Research and Development (R&D) for wineries?

    Most people think that R&D is only for tech and medical companies, but agriculture can also qualify for the Federal Research and Development Tax Credit. Eligible costs typically include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent.

    The Tax Credit allows a credit of up to 20% of the excess of qualified research expenses, which must meet the following criteria:

    • New or improved products, processes, or software
    • Technological in nature
    • Elimination of uncertainty
    • Process of experimentation

    For wineries, the following processes may qualify for R&D Credit:

    • Developing wine cave
    • Land development and irrigation improvement
    • Analytical software
    • Harvesting technologies
    • Gene culturing
    • Spoilage prevention
    • Preservation (after the bottle has been opened)
    • Wine blending
    • Packaging and bottling innovation

    To claim the credit, a third party may be hired to perform a Research and Development study aimed at identifying qualifying processes and activities. If R&D efforts do not warrant a third party study, internal documentation with respect to innovative processes and activities should be maintained to support qualifying expenses for R&D credit calculation.

    1. Do wineries qualify for the Section §199 Tax Deduction?

    Any manufacturing, blending, and finishing of wine that is later poured into a bottle with a label for wholesale is considered an eligible production activity. IRC § 199 allows a business with “qualified production activities” to take a deduction equal to 9% of the lesser of (1) the qualified production activities income of the taxpayer for the tax year or (2) taxable income (determined without regard to Section 199) for the tax year. The deduction is also limited to 50% of the W-2 wages of the employer for the tax year. The IRC § 199 deduction is allowed for both the regular tax and the alternative minimum tax.

    Bottom line, if you’re making wine and making money, there is 9% deduction in taxes that is available to you. Note that the Trump Administration’s tax reform proposal is seeking to eliminate this deduction, so take advantage of it while you can!

    1. Are there any additional tax breaks for wineries?

    There are many special deductions available to agricultural businesses, here are a few that most wineries can benefit from:

    • Agricultural businesses, including wine producers, can carry losses back five years, while most businesses are only allowed a two-year net operating loss carryback
    • Many growers who cannot use the cash method can deduct post-harvest/pre-bud break costs.
    • Agricultural equipment that is primarily used in producing and harvesting is allowed a sales tax exemption. Solar equipment that help power qualifying machinery are exempt from sales tax. If you have already installed a solar system, you may be eligible for a refund on taxes paid up to three years ago
    • IC-DISC: if your winery exports products, it may benefit from Interest-Charge Domestic International Sales Corporation (IC-DISC) entity structure. IC-DISC only exists on paper and it is not taxed at the federal level. This entity’s sole purpose is to collect sales commission from overseas and then distribute the income back to their shareholders in the form of qualified dividends. Tax savings can be significant at the highest tax bracket due to lower rate at which qualified dividends are taxed compared to ordinary income.

      Monic Ramirez

    Monic Ramirez is a Tax Partner at Sensiba San Filippo specializing in tax planning and compliance. She is an expert in multi-state taxation and foreign operations and works with a wide range of industries, including closely-held businesses, agriculture and manufacturing and distribution. Monic can be reached at mramirez@ssfllp.com or at 408.776.8900.

     

  • Sun-Maid outgoing President Featured in American Vineyard

    Check your mailboxes for the December issue of American Vineyard Magazine, Featuring outgoing President of Sun-Maid Barry Kriebel, Wildfire Damage Assessment to the CA Wine Industry, and more… If you don’t currently receive the magazine and would like to, subscribe for free here.

  • Sonoma County Agriculture Community Shows Strength and Resilience Following North Bay Wildfires

    Santa Rosa, Calif., (November 29, 2017) – On October 9th, Sonoma County woke up to a natural disaster no one expected. Over the next week, more than 100,000 acres burned in Sonoma County and neighboring counties were also battling wildfires. During this time, fires in the North Bay burned an area larger than New York City.

    Karen Ross, Secretary of California Department of Agriculture, visited Sonoma County on October 30th and spoke to rural residents about the recent wildfires in Sonoma County. From left to right: Sonoma County Farm Bureau President Steve Dutton, Second District Director Andrea Krout, Secretary Ross, and Second District Sonoma County Supervisor David Rabbitt at the Agricultural Lands Fire Recovery and Rural Lands Fire Recovery and Resource Town Hall Meeting. Photo by Reachel LaFranchi.

    Despite the devastation our community experienced, more than 90% of Sonoma County was left unharmed, and in the weeks following the fire, our community has shown we are stronger than ever. We saw this repeatedly throughout the week our agricultural community was threatened.

    On Thursday, October 12th, as the fire approached the Mickelson family’s cattle in Sonoma Valley, the family knew they needed to move their livestock. More than 180 head of weaned calves and heifers were in the fire’s path.

    Jim Mickelson said getting help was fairly easy as his son called neighbors and friends to come in and load up the cattle. Everyone was willing to assist, and they had two semis and eight goosenecks show up to load all the cattle off the property and haul them to a ranch in Bodega.

    The pastures later burned, some partially and some completely, but the Mickelsons said they were part of the lucky ones. They lost pasture land, fencing and some tin off their barns but their structures all remained intact.

    The Mickelsons’ friends and neighbors showing up to help haul cattle is only one in an endless string of stories over the past month where the community has stepped up.

    Karen Ross, Secretary of California Department of Food and Agriculture, only reiterated this when she visited Sonoma County on October 30th and spoke at Sonoma County Farm Bureau’s fire recovery town hall meeting.

    “The one thing I’ve noticed from day one was the spirit of people in this community,” said Secretary Ross, “the willingness to do something for many they didn’t even know, to sacrifice something to help protect others, and that’s the spirit that we’re all going to have to hold onto and keep going with.”

    Secretary Ross recalled Nick Frey always saying “welcome to paradise” when she arrived in Sonoma County. Sonoma County is still paradise, she told the agricultural community, and although it has some scars, everyone knows that Sonoma County is still a special place.

    The town hall meeting offered resources for rural land owners with nearly 20 local, state and federal agencies offering support and information on recovery and rebuilding in rural areas.

    As the focus in Sonoma County moves away from the devastation and towards recovery and looking ahead, it’s important to remember Secretary Ross’ words “Sonoma County is still paradise.”

    Much of our agricultural community and the greater Sonoma County community relies on tourism. We are here, we are open for business. Support your local farmers. Encourage others to support our local farmers, wineries and businesses. Our community is strong. Our community is resilient. And with rolling acres of vineyards, hills with grazing livestock as far as the eye can see, and so much more diversified agriculture, our community is still standing strong.

    Sonoma County Farm Bureau has orchestrated many programs over the last month to help our rural community as well as providing as much information as possible to our members. If there is anything you need, please don’t hesitate to reach out to our office. Sonoma County Farm Bureau has been working for our agricultural community for 100 years, and we will continue to be here to support you in good times and bad.

    You can watch Secretary Ross address the Sonoma County agricultural community here: youtube.com/watch?v=5QCkGBIF8YA

  • How Farms can Donate Fresh Food for Tax Deductions

    Charitable Contributions for Farmers

    It is common for businesses to receive tax deductions for cash donations, but did you know that the agriculture community can donate fresh foods for a similar benefit? California farmers and agriculture businesses have the opportunity to donate fresh fruits and vegetables in return for some pretty hefty tax breaks.

    How much is the deduction? 

    In order to calculate the federal deduction and the California credit, your accountant will need to know the cost basis of the donated fruit as well as the fair market value (FMV) of that fruit as of the date it was contributed.

    Normally, the federal deduction for inventory contributions is limited to the FMV on the date of contribution or the cost basis of the inventory, whichever is lower. However, there is an enhanced deduction allowed for the contribution of food inventory to a qualified organization that allows for an “above-basis” deduction. This deduction equals the lesser of: (1) the basis of the contributed inventory plus one-half of the ordinary income that would have been recognized if the inventory had been sold for FMV on the contribution date, or (2) twice the basis of the property. As is often the case, there are special rules for certain taxpayers. If you are not using full absorption to account for your inventories, consult with your accountant as special rules will apply.

    For farm partnerships, the result of the above calculation would be passed through to the individual partners within the partnership. The deduction is then limited to 15% of their net income from all businesses that made food contributions. This means that their deduction would be limited to 15% of their net income from the farm entity that made the donation. If individual farmers who are also partners in farm partnerships made food contributions to qualified organizations, then the net income of both activities would be added together in determining the 15% limitation. Any unused deduction can be carried over and used in the five succeeding tax years.

    California law

    Under California tax law, a qualified taxpayer who donates fresh fruits or fresh vegetables to a food bank located in California is allowed a tax credit equal to 10% of the cost that would otherwise be included in inventory costs. In the case of farm partnerships, the credit would be passed through and used by the individual partners. Any unused credits may be carried forward for seven years. It’s important to note that this credit has expired, however, there is a possibility of extension, so speak with your accountant to learn more.

    Here’s an example

    Partnership A owns a farm that grows fruit.  The partnership donates unsold fruit to the local food bank.  A determines that the basis of the contributed property is $180,000.  A also determines that one-half of the ordinary income that would have been recognized if the inventory had been sold for FMV on the contribution date is $40,000.  The deduction would consist of the lesser of: (1) the basis of the property contributed plus one-half the profit = $180,000+$40,000 = $220,000, or (2) twice the basis of $180,000 = $360,000.  In this case, the lesser figure of $220,000 would be the enhanced deduction for the food inventory contributed.  That deduction would be passed along to the partners of the partnership. The charitable deduction on the partner’s tax returns would be limited to 15% of the income from the partnership that made the food donation.

    Please note that if the donated inventory was not included in the opening inventory, but rather was produced during the current year,the donated inventory would be considered to have zero basis. This means that the enhanced deduction for food inventory would only be $40,000 in the example above, as the $180,000 cost of that fruit would instead be included as part of the cost of goods sold deduction in the current year.

    If you have questions about charitable food donations or want to learn more about how to claim the deduction, please contact Sensiba San Filippo Partner, John Slater, at 559.437.0700 or at jslater@ssfllp.com.

  • Sonoma County Winegrowers name new Director of Marketing and Public Relations

    Santa Rosa, Calif., (November 27, 2017) – Sonoma County Winegrowers has received a great deal of media attention in recent years.  From being recognized a global leader in its quest for

    Amy Landolt joins following career in wine marketing

    100% wine sustainability to providing insight on annual harvests to most recently sharing a perspective on the impact of last month’s fires has required a lot of interaction with the media around the world.  So when the organization recently went looking for a new director of marketing and public relations, it wanted someone with wine industry knowledge and marketing experience.  They found it in California wine industry veteran, Amy Landolt, who was just announced as the organization’s new Director of Marketing and Public Relations.

    “Amy possesses both the wine marketing experience and communications expertise that we were looking for,” said Karissa Kruse, president of the Sonoma County Winegrowers. She added, “We are thrilled she is joining us and I know Amy will add immediate value to our team and to our grower members.” 

    Amy has worked throughout California’s premier wine regions including in Paso Robles, Temecula, Napa and Sonoma County.  Most recently she was the senior marketing manager at Pernod Ricard USA where she worked on the Kenwood Vineyards and Mumm Napa brands.  Prior to that, she was the marketing manager at Benziger Family Winery and Imagery Winery in Glen Ellen.  She is a graduate of San Diego State University and earned an MBA at Cal-Poly, San Luis Obispo.  Her responsibilities at Sonoma County Winegrowers will include leading public relations efforts with trade and consumer media, coordinating the Sonoma County marketing strategy and manage community relations.

    “I am honored to be joining the team at Sonoma County Winegrowers,” said Landolt. She added, “I truly believe that every step of my career has prepared me for this great opportunity to promote and preserve Sonoma County’s rich history of agriculture and sustainability on behalf of our region’s winegrape growers and their families.”

  • Winemaker Gina Gallo of E. & J. Gallo Winery to Keynote at the Unified Wine & Grape Symposium

    SACRAMENTO, CA, November 20, 2017 – Third generation winegrower and artisan winemaker Gina Gallo of E. & J. Gallo Winery will deliver the keynote luncheon speech on opening day of the 2018 Unified Wine & Grape Symposium on Tuesday, January 23, in Sacramento at the Sheraton Grand.
    “As a member of one of America’s historic winemaking families, Gina embodies a sense of tradition, family legacy, craft and business acumen that transcends generations and inspires future growth amongst colleagues,” says John Aguirre, president of the California Association of Winegrape Growers (CAWG), a co-organizer of the event along with the American Society for Enology and Viticulture (ASEV).
    Gina Gallo oversees the Gallo Signature Series and Ernest & Julio Gallo Estate wines. In her role, she is intimately engaged with the Gallo family’s premier estate vineyards in Napa, Sonoma and Monterey counties. As the Senior Director of Winemaking, she views winemaking as both a creative expression of the land and as a demonstration of the unique qualities of a specific vintage. Her values stem from her family’s entrepreneurial history, using her experience and creative vision to craft luxury wines from her favorite blocks from the family’s estate vineyards.
    Gallo was a 2016 inductee to the James Beard Foundation’s Who’s Who of Food & Beverage in America. Fortune magazine named her one of the “Most Innovative Women in Food and Drink,” and she was named #17 on Decanter magazine’s “Power List” of the most important men and women in wine. She is a board member of the American Farmland Trust, which works to preserve agricultural land, and Taste of the NFL, which raises funds and awareness for food banks and anti-hunger initiatives.
    Unified’s Tuesday keynote luncheon was first introduced in 2014 and has since become a feature of the Unified Symposium. Tuesday also includes a welcome reception in the late afternoon — an added benefit with every general registration. 
    The 2018 Unified Symposium will again take place at the Sacramento Convention Center, located in downtown Sacramento, January 23-25.
    Built with the joint input of growers, vintners and allied industry members, the Unified Symposium serves as a clearinghouse of information important to wine and grape industry professionals. The Unified Symposium also hosts the industry’s largest trade show of its kind, with over 650 vendors displaying their products and services. For additional information, visit www.unifiedsymposium.org.