Tax on Tractor?

[Rob-D]

Hi Everyone,
Is the tax I paid for my 2006 JD tractor allowable as a general sales tax deduction?

 

[BillyP]

I don't have a clue but I'd sure ask my CPA?

 

[Champy]

I didn't pay any sales tax on my new JD since I signed a waiver that it's primary use was for an agriculture based business/farm. Which is true by the way..........I'm building and running a Xmas tree farm..

Also, my CPA is depreciating the cost of the tractor over 7 years (I think). This helps to offset the cost against revenues generated on the farm.

 

[Rob-D]

My tractor is used around my several acres of land and I don't run a farm. There must be some of you in the same boat as me. It's a couple of grand on my long form.

 

[JOELENAHAN]

Yes, It can be used as an itemized deduction on your Federal taxes. You have the choice of taking the general sales tax deduction or the deduction for state and local income taxes paid.

 

[Rob-D]

Thanks Joel,
I spoke with the big guy and they told me IF your specific state classifies a tractor as a motor vehicle you can take the deduction. I have an inquiry into my state (Never York) asking them their position.

Hey, it's a recreational vehicle to me!

 

[George2615]

My CPA says if you have agricultural status or use it for business you can deduct sales tax on it. I think there is a requirement on a certain number of acres (40 acres or more) around my area to have AG status.

 

[RalphVa]

You can either deduct your sales tax, including large purchases like car or tractor taken in excess of the normal amount they allow, OR state income tax. I tried it on my tractor for my 2004 return, but the state income tax was a bigger deduction.

Ralph

 

[savageayape]

I didn't pay any sales tax on my new JD since I signed a waiver that it's primary use was for an agriculture based business/farm. Which is true by the way..........I'm building and running a Xmas tree farm..

Also, my CPA is depreciating the cost of the tractor over 7 years (I think). This helps to offset the cost against revenues generated on the farm.

Champy,

I own a small business in Indiana. I don't understand how you can avoid paying taxes on a piece of equipment just because it's purchased for use in your business. Don't get me wrong, I'm not claiming to be a tax expert. I just know that I have to pay sales tax on every piece of equipment I purchase and use in my business. When I purchase equipment from out of state, I still have to pay Indiana sales tax on it. They would fine me and possibly worse if I did not pay the tax. Is a tractor or vehical treated different with regard to sales tax when purchased for business use only? Now, I do NOT pay sales tax on an item I purchase which I will be re-selling through my business, but I must pay sales tax on equipment or any other item I purchase for business use, however, my accountant will depreciate all equipment as allowed... Again, I'm not saying you're wrong, I just don't understand what you are doing.

 

[Champy]

Champy,
I own a small business in Indiana. I don't understand how you can avoid paying taxes on a piece of equipment just because it's purchased for use in your business. ... Again, I'm not saying you're wrong, I just don't understand what you are doing.

I really don't have (or know) the exact IRS specifics, but between my CPA and the John Deere dealer, it was pretty much a simple transaction. Here is how it was explained (and transacted): "Is the purchase of your tractor for PERSONAL, COMMERCIAL, or AGRICULTURAL use?" If used for Ag, then sign this exemption form from the Dealer, and no sales tax is charged - or owed.

If this was strictly for a commercial business or personal/residential use, then there is no exemption....it is centered on agricultural purchases only. I have an aggricultural based "business" - hence the exemption is granted. My CPA cannot approve this approach if I am not actively running a farm / nursery / etc...with the intent of generating a profit. And therefore filing all the appropriate tax forms (like Sched F), and also meeting all the Federal requirements for ag businesses / farms.

Hope this clarifies (the little I know on this subject).

 

[ruglad03835]

Tax, What Tax?????
Honestly when I lived in Rhode Island I had to pay sales tax and then the local town nailed me on a use tax they found in their books. My accountant was able to get it refunded but I had to show proof that I was not using the tractor for a business.
The Town even went so far as to ask for an inventory of the hand tools I had so they could even apply the use tax to them.

 

[JDFANATIC]

Tax, What Tax?????
Honestly when I lived in Rhode Island I had to pay sales tax and then the local town nailed me on a use tax they found in their books. My accountant was able to get it refunded but I had to show proof that I was not using the tractor for a business.
The Town even went so far as to ask for an inventory of the hand tools I had so they could even apply the use tax to them.

No wonder you fled to NH!

 

[Rob-D]

Good news!

OK, here's the run down in case any of you buy a tractor and want to itemize the deduction.

The IRS will allow the tax you paid on a tractor IF your state considers it a motor vehicle.

I contacted NYS tax dept. and they told me to contact the Dept. of Motor Vehicles. I did and my DMV told me that the tractor (all farm machines) are considered motor vehicles.

So if you bought a tractor and paid tax on it like I did you should contact your state DMV to see if they consider it a motor vehicle.

Here is the actual response from my DMV:

"Response (Central Dealers) - 04/11/2007 09:51 AM
If by tractor you are referring to a piece of farm equipment, yes; but they are not required to be registered. Although they are required to have at least the warning placards on them to be used on public roadways."

Rob

 

[ruglad03835]

No wonder you fled to NH!

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