As a kid, Alex Balsam loved to ride tractors. East Hampton was home to many potato farms at that time, and Alex looked forward to hanging around the farmers and farm machinery each summer. The experience led him to attend Cornell University for a degree in agriculture and start a farm in 2003.
His best college buddy, Ian Calder-Piedmonte, visited Alex in Amagansett to check out the progress of his farming dream — and stayed. The result of their business partnership is called Balsam Farms.
The owners knew MFB as a well-known CPA firm in the region. They began working with CPA and firm partner John Larkin on accounting and tax planning needs. MFB’s ongoing consulting attracted them because their business needs were getting more complex. It turned out that one of John’s clients was a longtime farmer friend of Alex who leased land to Balsam Farms.
As that farmer was getting into his 90s, John saw an opportunity to help out the farmer with his estate planning while also securing a stronger market position for Balsam Farms.
The farmer was concerned about selling the land outright to Balsam Farms due to potential taxation issues. He had set up a 20-year lease with Alex and Ian, with the intent that they could continue to farm the land after his passing. Due to his trusted relationship to the farmer and to Balsam Farms, John was able to negotiate a transaction in which the farmer was able to sell the land outright to the young farmers and receive payments into his estate that would not trigger a huge tax impact.
In this way, Balsam Farms secured the land for farming well into the future and the farmer’s family continues to receive value from the sale since his death in 2016. The land remains farmable and undeveloped as the farmer intended. “It took the trusted guidance that both parties had in John Larkin for the deal to come to fruition,” says Alex Balsam. “Access to land was one of our biggest challenges, of course, being on an island.”
With more than 60 acres of farmable land, the owners of Balsam Farms now have stronger equity in their business. They recently built a new barn. MFB continues to help Alex and Ian plan ahead for equipment purchases, taxes, financial decisions for each owner and other growth challenges. They employ up to 49 people between March and Labor Day and grow a variety of crops for CSA shares, retail farmer’s markets and some wholesale to restaurants and stores. They have moved beyond start-up to a viable business and career for both owners.
“It’s good to have someone who looks at our numbers all the time, what we have in equity and also how we structure the business in ways that are fair to both partners,” says Ian Calder-Piedmonte. “It’s nice to have that real and knowledgeable voice to count on so we can focus on farming. Our goal is to do this for a lifetime, and hopefully for generations.”
To read more, visit BalsamFarms.com.
For assistance with tax planning and smarter business transactions to improve the value of your business, contact MFB.