tax help with tractor purchase

[duckhunt]

I never thought I would be discussing taxes on this site.

All the previous post are correct, especially Pillar, except for the 6 months payments.

Starting with the Sales tax, you will have to look into your individual state laws. In Louisiana, you can exempt out of State Sales Tax 4%, if you sign a form saying you file Schedule F on your federal income taxes. You can not get out of paying local sales tax.

Moving on the Federal Income, you can elect 179 and fully depreciate or partially depreciate your asset ONLY in the year purchased (date doesnt matter). Remember sec179 has an income limitation. You cant create a loss with accelerated depreciation. Also take note of the Sec179 carryover. May be a good tax planning tip.

I have to agree with AndyMa about the audit situation. Most will not stand up in an audit. Especially small Schedule F's with small income numbers or no income.

As far as the tax savings, everyones tax rate will be different depending on income amounts. You need to discuss this with your tax professional to understand all the limitations before you buy.

Hope this helps.

 

[MESSMAKER]

Thanks for the help. If I don't buy now, perhaps I could buy at Christmas with a 179 deduction and 90 days same same as cash and let the tax return cover the down pmt.

 

[Artful Dodger]

If you have an ag exempt card, in Tennessee, you don't pay sales tax. If it was approved, based on your schedule F you provided; there shouldn't be a problem.

 

[warhammer]

Curious as to what you think would stand up to an audit.
Would a piece of land that has been farmed commercially via lease for decades, has a farm number with the agriculture department, an ag exemption with the county and all current purchases can be demonstrated to live at and be used exclusively at the farm while taking over all production operations over the course of 2-3 years do it?

Depends on what state you live in, In Conn items purchased are sales tax exempt only if exclusively used in agricultural production AND you have a Ag tax exemption certificate. To get the certificate you need to file a form showing that you had $2500 worth of Ag income in the previous year. I believe you need to refile each year.

I will go on a limb here buy I would say the vast majority of guys on this site who claim farm status to not pay sales tax would not stand up to an audit.

Andy

 

[Punk]

Andy, Duckhunt,
If you're worried about an audit, don't apply for an exemption. If you're worried about an audit, don't write anything off on your taxes. If you're worried about a traffic ticket, then don't drive a car.

 

[duckhunt]

Punk,

I wasnt saying that I was worried about an audit, I was just pointing out several factors that should be considered before taking certain tax positions.
Thats all.

 

[impdaddy]

duck hunt. did you hunt ducks in Nebraska this past season?