Ways to Build Wealth ?

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Stocker Steve
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Ways to Build Wealth ?

Post by Stocker Steve » Thu Jan 17, 2019 7:13 pm

Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


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Caustic Burno
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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 8:52 pm

Stocker Steve wrote:Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


If it’s profitable it’s taxed.
Spending on exemption items not needed has loser all over it.
Your spending dollars to save pennies.

My goal was always to strive for the highest bracket.
Money doesn’t buy happiness, but the lack does buy misery.

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Re: Ways to Build Wealth ?

Post by Bright Raven » Thu Jan 17, 2019 9:40 pm

Stocker Steve wrote:Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


You are asking how to build wealth without incurring an annual income tax burden. The only way I know is what I referred to in the profitability thread. That is: increasing the value of your estate. This can be done in several ways.

1. Infrastructure. Barns, shops, handling facilities, fences, etc. During active operation, these capital investments can be depreciated against your annual revenue thus reducing your tax burden. Over the period of depreciation, the investments are written off. Thus, when the estate is sold, the value of the improvements are unencumbered.

2. Land improvements. Such as clearing low value land and converting it to pasture. Thus, the land value increases. Improvements to land productivity also increases land values.

3. Building your cattle herd. It is like putting money in the bank.

Items 1, 2 and 3 build wealth without the annual tax burden, however, at the time of estate sale, the increased sale price of the estate is going to result in capital gains tax.
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Re: Ways to Build Wealth ?

Post by sim.-ang.king » Thu Jan 17, 2019 9:51 pm

Caustic Burno wrote:
Stocker Steve wrote:Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


If it’s profitable it’s taxed.
Spending on exemption items not needed has loser all over it.
Your spending dollars to save pennies.

My goal was always to strive for the highest bracket.


I wish I paid million dollars in income taxes, because that means I made a lot more than a million dollars.
Why should I apologize for becoming a monster?
Did anyone apologize for making me one?

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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 10:00 pm

Bright Raven wrote:
Stocker Steve wrote:Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


You are asking how to build wealth without incurring an annual income tax burden. The only way I know is what I referred to in the profitability thread. That is: increasing the value of your estate. This can be done in several ways.

1. Infrastructure. Barns, shops, handling facilities, fences, etc. During active operation, these capital investments can be depreciated against your annual revenue thus reducing your tax burden. Over the period of depreciation, the investments are written off. Thus, when the estate is sold, the value of the improvements are unencumbered.

2. Land improvements. Such as clearing low value land and converting it to pasture. Thus, the land value increases. Improvements to land productivity also increases land values.

3. Building your cattle herd. It is like putting money in the bank.

Items 1, 2 and 3 build wealth without the annual tax burden, however, at the time of estate sale, the increased sale price of the estate is going to result in capital gains tax.



Again you spent dollars to save pennies in taxes. Your better off maximizing out your IRA first secondly investing in long term interest bearing funds or tax free bonds.
You can not spend yourself to prosperity on limited income.
Money doesn’t buy happiness, but the lack does buy misery.

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Re: Ways to Build Wealth ?

Post by Bright Raven » Thu Jan 17, 2019 10:07 pm

Caustic Burno wrote:
Bright Raven wrote:
Stocker Steve wrote:Working on my taxes this week. I am tired of paying income tax on profitable growth. :help: What are proven ways to efficiently increase ranching wealth ?


You are asking how to build wealth without incurring an annual income tax burden. The only way I know is what I referred to in the profitability thread. That is: increasing the value of your estate. This can be done in several ways.

1. Infrastructure. Barns, shops, handling facilities, fences, etc. During active operation, these capital investments can be depreciated against your annual revenue thus reducing your tax burden. Over the period of depreciation, the investments are written off. Thus, when the estate is sold, the value of the improvements are unencumbered.

2. Land improvements. Such as clearing low value land and converting it to pasture. Thus, the land value increases. Improvements to land productivity also increases land values.

3. Building your cattle herd. It is like putting money in the bank.

Items 1, 2 and 3 build wealth without the annual tax burden, however, at the time of estate sale, the increased sale price of the estate is going to result in capital gains tax.



Again you spent dollars to save pennies in taxes. Your better off maximizing out your IRA first secondly investing in long term interest bearing funds or bonds.
You can not spend yourself to prosperity on limited income.


You are missing his question. He stated that he is tired of the tax burden on income as he said on "profitable growth". You are responding on an annual taxes basis. I don't think that is what he means. I may be wrong and Steve can correct us. The way I read his question is how can he accumulate wealth without the annual burden of taxes. The only way I can see doing that in a farming occupation is to increase the value of the estate. It is similar to tax deferral.
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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 10:15 pm

Your still spending dollars to save pennies. Your actually ahead paying the taxes versus buying unnecessary equipment and buildings to be taxed and upkept.
There is no free ride.
That’s like looking at the salebarn check without the inputs. People do it every day on land and fool themselves after cost, taxes insurance and improvements. When the sell it thirty years later they will tell everyone how they made 100K. Won’t hear a peep about the 250K they put in.
You really fail the IQ test when you con yourself.
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Re: Ways to Build Wealth ?

Post by Lucky » Thu Jan 17, 2019 10:19 pm

I believe Bright Raven is correct. However everyone's situation is different. In my case I don't need any of the money the cattle make so I reinvest it into the ranch to avoid being taxed so hard. Any investment I make either saves money on the operation or improves the ranch so the value goes up. I do invest in a 401k and an IRA also but its important to be diversified too. Overall I would say the ranch makes more than the stock market does, mainly due to increasing land values. Cattle are a great asset because they are liquid and should pay for themselves while providing countless hours of enjoyment. ;)

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Re: Ways to Build Wealth ?

Post by Bright Raven » Thu Jan 17, 2019 10:21 pm

Caustic Burno wrote:Your still spending dollars to save pennies. Your actually ahead paying the taxes versus buying unnecessary equipment and buildings to be taxed and upkept.
There is no free ride.
That’s like looking at the salebarn check without the inputs. People do it every day on land and fool themselves after cost, taxes insurance and improvements. When the sell it thirty years later they will tell everyone how they made 100K. Won’t hear a peep about the 250K they put in.
You really fail the IQ test when you con yourself.


You have to assume that there are necessary capital expenses to run a cattle operation. These are essential such as a squeeze chute, fence, a barn, a tractor, etc. I am not suggesting any expenses that are not essential. Essential expenses are then depreciated over the allowed period of depreciation. That equipment and infrastructure has value after depreciation. Therein lies your wealth. In addition, there is the land. Unless you operate solely on lease or rental. That land increases in value and builds wealth. That can be accelerated by land improvements.
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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 10:28 pm

Y’all are ate up with spend 50K on a John Deere to save a few pennies on a 1040. You have less in the bank an another asset to upkeep.
It’s a great deal if you need the assets a fools game if you don’t.

It’s only worth what you can liquidate it for today.
It’s scrap wood and iron if you need cash right now.
Assets on the farm are nothing but a liability that has to be bought and upkept until you sell hopefully for a profit.
If you don’t sell it all you have is a liability to take care of.
Money doesn’t buy happiness, but the lack does buy misery.

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Re: Ways to Build Wealth ?

Post by Bright Raven » Thu Jan 17, 2019 10:35 pm

Caustic Burno wrote:Y’all are ate up with spend 50K on a John Deere to save a few pennies on a 1040. You have less in the bank an another asset to upkeep.
It’s a great deal if you need the assets a fools game if you don’t.

It’s only worth what you can liquidate it for today.
It’s scrap wood and iron if you need cash right now.
Assets on the farm are nothing but a liability that has to be bought and upkept until you sell hopefully for a profit.


No. I am not suggesting making frivolous purchases. In fact, I don't have my own hay equipment because it does not pencil out. There are essential investments that have to be made. You have to be able to move a round bale of hay. It takes a piece of equipment to do that - a tractor or skid steer. I am simply stating that those capital expenses can be depreciated. At the end of depreciation they have value. For example, my tractor was depreciated over a 5 year depreciation period. It still has value. If I sell my estate this summer, that equipment has value after being written off against my income. Which includes my retirement annuity.
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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 10:43 pm

Bright Raven wrote:
Caustic Burno wrote:Y’all are ate up with spend 50K on a John Deere to save a few pennies on a 1040. You have less in the bank an another asset to upkeep.
It’s a great deal if you need the assets a fools game if you don’t.

It’s only worth what you can liquidate it for today.
It’s scrap wood and iron if you need cash right now.
Assets on the farm are nothing but a liability that has to be bought and upkept until you sell hopefully for a profit.


No. I am not suggesting making frivolous purchases. In fact, I don't have my own hay equipment because it does not pencil out. There are essential investments that have to be made. You have to be able to move a round bale of hay. It takes a piece of equipment to do that - a tractor or skid steer. I am simply stating that those capital expenses can be depreciated. At the end of depreciation they have value. For example, my tractor was depreciated over a 5 year depreciation period. It still has value. If I sell my estate this summer, that equipment has value after being written off against my income. Which includes my retirement annuity.


You still don’t get it.
Your writing off pennies on the dollar.
You are not getting dollar for dollar back on your taxes.You reduced your taxable income over several years saving a few hundred by spending thousands.
Again great deal if you need the equipment.

It only has value when you sell it.
The rest of the time it’s a liability to pay taxes, insurance, upkeep etc. on.
Your fooling yourself to think otherwise.
Money doesn’t buy happiness, but the lack does buy misery.

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Re: Ways to Build Wealth ?

Post by Bright Raven » Thu Jan 17, 2019 10:45 pm

Caustic Burno wrote:
Bright Raven wrote:
Caustic Burno wrote:Y’all are ate up with spend 50K on a John Deere to save a few pennies on a 1040. You have less in the bank an another asset to upkeep.
It’s a great deal if you need the assets a fools game if you don’t.

It’s only worth what you can liquidate it for today.
It’s scrap wood and iron if you need cash right now.
Assets on the farm are nothing but a liability that has to be bought and upkept until you sell hopefully for a profit.


No. I am not suggesting making frivolous purchases. In fact, I don't have my own hay equipment because it does not pencil out. There are essential investments that have to be made. You have to be able to move a round bale of hay. It takes a piece of equipment to do that - a tractor or skid steer. I am simply stating that those capital expenses can be depreciated. At the end of depreciation they have value. For example, my tractor was depreciated over a 5 year depreciation period. It still has value. If I sell my estate this summer, that equipment has value after being written off against my income. Which includes my retirement annuity.


You still don’t get it.
Your writing off pennies on the dollar.
You are not getting dollar for dollar back on your taxes.You reduced your taxable income over several years saving a few hundred by spending thousands.
Again great deal if you need the equipment.

It only has value when you sell it.
The rest of the time it’s a liability to pay taxes, insurance, upkeep etc. on.
Your fooling yourself to think otherwise.


Let's let folks read this. They can decide.
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Diogenes.

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Re: Ways to Build Wealth ?

Post by Caustic Burno » Thu Jan 17, 2019 10:46 pm

Doesn’t look near as pretty when you see the true outputs.
Money doesn’t buy happiness, but the lack does buy misery.

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Re: Ways to Build Wealth ?

Post by Lucky » Thu Jan 17, 2019 11:02 pm

Caustic Burno wrote:Doesn’t look near as pretty when you see the true outputs.


I see your line of thinking..... This was shaping up to be an excellent thread.....maybe you can start one on how every dollar you spend on the farm is waste and how the sun never shines. Lets get this one back on track.

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