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JTE
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2002-12-16          46167

I own a 300 acre farm in West Tennessee. I have been told that you can buy a tractor and write it off (small farm usuage) up to so much a year. Does anyone know the tax laws that apply to this?

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Peters
Join Date: Feb 2002
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2002-12-16          46170

You file the farm as a business and purchase the tractor under the business. You need some income from the farm to justify the equipment. You can do this even if you have it in agricultural reserve if you are mowing the fields. ....

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Billy
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2002-12-16          46174

Not only your tractor but a whole lot more. Like diesel, tools, fence post, wire, the list is endless. You need to talk to a CPA.

Billy ....

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TomG
Join Date: Feb 2002
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2002-12-17          46206

I would check tax laws to see if taking tax write-offs for business operation would create a capital gains liability if the property is sold. Probably not but it would be good to know if a nasty surprise might be lurking in the future. ....

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Billy
Join Date: Oct 1999
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2002-12-17          46207

If you were to add the cost of property and deprectiate it off yout taxes, when or if you ever sell it, you'd have to pay taxes on it.

The government isn't gonna give you anything without taking it back.

There's probably ways of getting out of paying taxes on gains though. Like if you went out of the farming business before it was sold? Then all the property would become personal property.

Billy ....

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Chief
Join Date: Jul 2003
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2003-09-27          64985

Here is the latest John Deere "poop" on depreciation and tax advantages on equipment. ....


Link:   New tax savings offer unprecedented opportunity to update equipment

 
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Chief
Join Date: Jul 2003
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2003-09-27          64986

I'm in Middle Tennessee, what 'bouts are you at JTE? ....

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DSP348
Join Date: Sep 2003
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2003-09-30          65142

As I understand it, a seller is not required to collect state sales tax if the item is shipped out of state. However, most/all states require you to pay a use tax on on such items. It is up to you to take the initive and pay the tax in your state. Maybe some of the dealers on list can elaborate on the specifics. ....

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Chief
Join Date: Jul 2003
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2003-09-30          65143

Sales taxes are not collected on agricultural use equipment as well. Usually, proof such as a Dept. of Agriculture Farm Certificate with your farm number on it will suffice. At least in TN that is the case. ....

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AC5ZO
Join Date: Jul 2003
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2003-09-30          65148

My CPA has been looking into this for me. His comment about generating some income was consistent with other posts in this thread. He also mentioned a truck that I own that is over 7500 GVW. In addition, when you start having a farm business, it is also consistent to write off the office that you use to administer the farm. The list goes on, so it is good to get a CPA to do things right and to look for the right deductions.

There is sales tax on farm stuff in NM, but it is about half of the rate collected on everything else. ....

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DRankin
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2003-09-30          65152

I think we are mixing our metaphors here.

There is a difference between paying state sales tax on a purchase and taking Federal income tax deductions or depreciation on an annual basis.

If you have escaped a state sales tax I don't think the Federal tax agents are going to knock on your door. ....

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kwschumm
Join Date: Feb 2003
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2003-09-30          65155

In our area Washington state has sales tax with no income tax, Oregon has an income tax with no sales tax. To avoid taxes lots of folks live in Washington and shop across the Columbia river in Oregon. This really frustrates the WA politicians, so once in awhile they have state troopers stop folks who cross the Columbia back into Washington with obvious loads of new goods that were purchased in Portland. Families with station wagons full of Costco purchases, pickup trucks with wide-screen TV's or appliances in the bed, etc. They pull 'em over and take a quick inventory of their new goods, check receipts, then give the info to the WA dept. of revenue to make sure that the purchasers pay a use tax on it. They do this for a week or two each year to "encourage" use tax on purchases. ....

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Chief
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2003-09-30          65156

If the equipment is agricultural type equipment (meaning NOT residental type machines) and you do file a Schedule F you can depreciate the equipment or with the new tax legislation expense it up to 60% as covered in the earlier link on your federal income taxes and state sales taxes are not collected on it in TN (may differ from state to state. If the equipment is used for other business purposes such as lawn care, landscaping, etc. The states sales tax in TN is collected (again may vary from state to state) but the equipment may be depreciated on your federal income tax return as a business expense or depreciation. You should verify these points with your tax preparer or CPA as I did and also have reciepts and certficates to verify status.

Paying the taxes you owe is a good thing. Paying taxes you don't owe or allow the IRS to intimidate you out of applying for the lawful deductions or credits you are legally entitled to is throwing money away.
....

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AC5ZO
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2003-09-30          65157

Dave, you are right about the home office deduction being an audit flag. I can stand for an audit. You have to make a personal choice on whether you want to take something that you are entitled to, or just give it away because an audit is a possibility.

I have a secondary business that my wife runs. It has never made a good profit and has often posted a loss. It is a legitimate business and generates significant income, but is it low margin and making a profit is difficult. I benefit even if the business does not make a profit because it is the tenent in a building that I own. Could I be audited for this? You can always be audited! I can stand the audit for this also. There is no cheating to catch.

Mark, you are right about mixing the state and federal taxes in this thread. Both are relevant, however. ....

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Billy
Join Date: Oct 1999
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2003-09-30          65163

Oklahoma doesn't have a Use Tax but some cities and counties have adopted one.

I bought a 4wheeler in Texas, back in 97. The dealer said to get out of paying Texas tax, he would deliver it 2 blocks down the road, in Arkansas. I met him there and they put it in my truck and drove away, all legal.

Not all states are the same. For example, I can buy livestock medication in Oklahoma and not pay tax but in Arkansas, I do. I can buy the same medication in AR and have them delivered to OK and no tax. On the electric bills, my house bill has no tax added but the farm electric bills have state and county taxes added. Some of this stuff doesn't make sense. ....

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AC5ZO
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2003-09-30          65166

Billy, Tax laws simply don't make sense and that is why CPAs can make a good living only focusing on tax issues.

Dave, I used to do my own taxes and then it just started taking longer and longer. Some CPAs are more agressive than others. Mine is more agressive than most.

He even refigured taxes for me on previous year's returns and if I do get audited he still won't cost me what the state and federal folks refunded to me years after I paid the taxes where I was entitled to a deduction that my previous CPA avoided out of fear. When you apply for a refund years after the fact, they take a nice close look at the return. They disallowed 2.5% of what we claimed as a refund.

Now the CPA is working on deducting the tractor and the H2 since it has a GVW of > 7500 #. ....

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Chief
Join Date: Jul 2003
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2003-09-30          65170

Tisk, tisk, tisk. Mike, Arianna Huffington would be very upset with you. ;-) ....

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AC5ZO
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2003-09-30          65171

As Arnold recently said, Ariana uses tax loopholes big enough to drive a Hummer through.

BTW, I get 13.8 MPG on the H2. That is quite a bit better than my old pickup truck. ....

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Chief
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2003-09-30          65172

That is not bad gas mileage for a vehicle that heavy. You need that 572 cubic inch Chevy crate motor or a tricked out 6.5 litre turbo diesel to move that H2 along. ;-) I was pulling your leg as Arianna is one of the political types trying to out law SUV's and I was thinking the same thing as you with the driving the Arnolds H2 through the tax loop holes she takes. LOL! If I could afford it, the wife would be driving a Powerstroke powered Excursion. I like having lots of steel around the wife and I driving down the road. ....

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AC5ZO
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2003-09-30          65175

I have been hit by drunk or inattentive drivers three times. My wife has been hit once. I am not accounting for close calls. There is no substitute for a heavy vehicle.

The repair bill for having four hits on my vehicles. Zero. The plastic bumper decoration strip on my GMC 4X4 Sierra Pickup has a dent in it, but the sun has done more damage than the collisions. The guy that hit my wife bounced her forward after hitting the spare tire on her Jeep. He was asleep when she got out and he high-tailed it for the safety of the reservation when he woke up. The ones that hit me were at higher speed and my trailer hitch did considerable damage to their front ends.

Newton got it right. F= M x A It is good to be the mass. ....

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Chief
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2003-09-30          65176

Well said Mike! Definitely good to be the mass part of that equation. ;-) ....

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AC5ZO
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2003-10-01          65232

Dave, I drive heavy vehicles for several reasons.
1. Safety for me and people riding with me.
2. I live on a dirt road in the desert.
3. I am a big guy and I don't fit comfortably into a small truck.
4. I live out of town, I need to have a vehicle that will carry a load.
5. I like them.

The tax situation is nice, but really would not change what I drive, or how I drive it. ....

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AC5ZO
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2003-10-02          65286

Dave I am not arguing with you. Making a numbered list simply allows me to address my points quickly in a short post. There is no reason to assume that it means anything more than that.

We all know that threads tend to wander. I am sure that the regulars remember the Beaver Dam or Chris Rock posts. The relevant line through this one seems to be tax deductions and posts that don't directly address that (from me anyway) are answering some question or comment posed previously in the thread. Tax deductions and tax strategies are nice, but my point was that they are secondary to getting and using the equipment that we want, whether it be a truck, tractor, office or whatever. Maybe I did not address that directly enough.

There are some other ways to get some tax benefit if a "hobby" makes some income, or if you are an employee and have some legitimate business expenses that are not reimbursed by your company. These are special cases and anyone interested in them should consult an expert; not me.

I don't know why my last post bothered you. It was certainly not intended to offend anyone in its content or form. We all exchange some personal information and certainly the regulars get to know one another to a degree.
I guess I would think that if we were going to have general discussions of trucks, hemi motors, wood chucks, coyotes, generators, land use, taxes and so forth that my personal situation and reasons for owning a truck would fit nicely in there somewhere. ....

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DRankin
Join Date: Jan 2000
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2003-10-02          65290

Dave. If the conversation is moving too fast for you please feel free to sit on the sidelines for a while and catch your breath.

Are you listening to yourself? I figure we are about two days away from another one of your tantrums. Changing your screen name didn't seem to help you.

Yesterday you wrote: "Could you not tweak that tenancious streak to a more positive tone that would benefit everyone and the site ? "

Maybe you should follow your own advice. Your input is certainly welcome here, especially when you are not picking fights.

I have noticed your morning/weekday postings seem thoughtful and well reasoned while your evening and weekend postings become strident, critical and abusive.

What is going on?
....

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kwschumm
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2003-10-02          65295

I don't see how AC's post was provocative or offensive in any way. On the contrary, I found it interesting to read his concisely stated reasoning. There's certainly nothing in his post to warrant a hostile response.
....

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Murf
Join Date: Dec 1999
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2003-10-02          65312

Dave (and all others too), please take this as nothing more than what I intended it to be, an observation.

I don't think anyone in this thread was trying to be condescending, nor were they trying to cause hard feelings nor take cheap shots.

I took AC's comments to have been given in point form merely in an effort to achieve brevity, something I need to work on myself at times.

You're right, I think we have all given (and taken) a few barbs and jabs along the way here, but we're still here, we're still adults, and life goes on....

Now, who's turn is it to buy the next round of Cyber drinks.

Best of luck. ....

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AC5ZO
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2003-10-03          65405

This is that last thing that I am going to say on this thread. This is not directed an any one person.

I took no pot shots, cheap shots or any other kind of shots at anyone. I am a pretty straight forward guy. If I disagree with you, I will tell you. You will not need to find implications or inuendo in phrases or presentation formats that I pick.

I do not have a problem with considered differences in opinion. If I state my opinion and you agree with it fine; if you don't, that is fine with me too. If I think that you are wrong and you are trying to convince someone else of something, I will say so. I find it refreshing to be wrong myself every now and then, because I learn more when I get a surprise or have to look at something in a different way.

I referred to two previous posts only because they grew quickly and just as quickly got off topic. I participated in those posts as well as others. Other than that I have not got a clue about the references to Abraham Lincoln, communism, and other such things. I do not read every post that is put on this forum. I travel on business and there may be days at a time that I don't check into the forum. When I do check in, I will post if I think that I can offer something; otherwise I don't. I read a lot more than I write. As far as going off topic I plead "guilty". "Let he who is without guilt cast the first stone." ....

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DRankin
Join Date: Jan 2000
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2003-10-03          65406

I quit toting rocks around a long time ago.

Topics evolve as new questions are raised. If something gets off track we are certainly free to re-pose the question, start a new thread with a tighter focus or just refrain from participation.

There is never a need to cast stones or aspersions. Calling nasty names or making veiled threats has no place here or in any civilized setting. ....

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