Being honest

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Nesikep
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Re: Being honest

Post by Nesikep » Sun Nov 10, 2019 11:41 am

WestTNguy wrote:
Sat Nov 09, 2019 10:09 am
If I can have a tractor I can depreciate each year, that holds its value...I can sell it later and recover some cash. I hope. I’m not an expert at this, but I feel like this is the best method for me.
Around here, if you sell something for more than its depreciated value, that's taxable income.. We don't have some of our equipment listed in our taxes because we bought it cheap enough we'll never sell it for less, it is probably appreciating in value


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Re: Being honest

Post by WestTNguy » Sun Nov 10, 2019 2:57 pm

Lots of stuff to take into consideration here. I’d have to double check, but I think in my state you have to show a profit 3 of 5 year. And I believe that amount is only $1000. I’m 95% sure I read that, but I’ll have to double check.

Then again, a coworker depreciates rental property and he said he shows a loss every single year. I know it’s not farming, but either way.

All very helpful. I agree with what you all are saying.

I guess the years I need to show a profit, I just don’t write anything off and take a hit like I’ve been doing for 8 years.
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Re: Being honest

Post by WestTNguy » Sun Nov 10, 2019 3:44 pm

Nesikep wrote:
Sun Nov 10, 2019 11:41 am
WestTNguy wrote:
Sat Nov 09, 2019 10:09 am
If I can have a tractor I can depreciate each year, that holds its value...I can sell it later and recover some cash. I hope. I’m not an expert at this, but I feel like this is the best method for me.
Around here, if you sell something for more than its depreciated value, that's taxable income.. We don't have some of our equipment listed in our taxes because we bought it cheap enough we'll never sell it for less, it is probably appreciating in value
From what I’ve read in the federal tax guide, you can either depreciate something (truck for example) or you can write off expenses like gas, mileage etc. You have to pick one or the other methods and stick with it. If you choose to write off expenses....what does that mean when you go to sell?
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Re: Being honest

Post by Nesikep » Sun Nov 10, 2019 9:30 pm

I think that choice would come to if you chose a flat rate for charging mileage, which if the vehicle is mostly used for non-farm use (like going to your day job) would be appropriate, in which case you can't deduct the expenses of owning it.. There's probably a "reasonable rate" listed somewhere for what you can charge...
If the vehicle is mostly used for farm business, then parts, fuel, insurance, and depreciation ought to apply to expensable items.. I know our tax codes are a bit different up here, but what you're suggesting sounds ridiculous.

The tax man has a very difficult time telling if that CR 23990 seal you bought is for your tractor or your truck BTW!
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Re: Being honest

Post by Jeanne - Simme Valley » Mon Nov 11, 2019 6:42 am

When you buy a farm item, you choose on each item whether you are going to expense the whole cost that year, or part of it and depreciate the rest, or depreciate each year based on full cost. You do that with ASSETS, not costs like fuel, fertilizer, etc.
If you bought something for $10,000 and you depreciated for a few years then sell it, you take the orig cost, less the depreciated amount, then figure out loss or profit.
$10,000 - $4,000 depreciation = $6,000.
Sold for $7,000, you have to claim a $1000 income.
If you sold it for $4,000, then you would have a $2000 expense/loss.
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Re: Being honest

Post by WestTNguy » Mon Nov 11, 2019 7:14 am

Jeanne - Simme Valley wrote:
Mon Nov 11, 2019 6:42 am
When you buy a farm item, you choose on each item whether you are going to expense the whole cost that year, or part of it and depreciate the rest, or depreciate each year based on full cost. You do that with ASSETS, not costs like fuel, fertilizer, etc.
If you bought something for $10,000 and you depreciated for a few years then sell it, you take the orig cost, less the depreciated amount, then figure out loss or profit.
$10,000 - $4,000 depreciation = $6,000.
Sold for $7,000, you have to claim a $1000 income.
If you sold it for $4,000, then you would have a $2000 expense/loss.
That makes perfect sense. Thanks
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Re: Being honest

Post by WestTNguy » Mon Nov 11, 2019 7:19 am

Nesikep wrote:
Sun Nov 10, 2019 9:30 pm
I think that choice would come to if you chose a flat rate for charging mileage, which if the vehicle is mostly used for non-farm use (like going to your day job) would be appropriate, in which case you can't deduct the expenses of owning it.. There's probably a "reasonable rate" listed somewhere for what you can charge...
If the vehicle is mostly used for farm business, then parts, fuel, insurance, and depreciation ought to apply to expensable items.. I know our tax codes are a bit different up here, but what you're suggesting sounds ridiculous.

The tax man has a very difficult time telling if that CR 23990 seal you bought is for your tractor or your truck BTW!
This is why I’m asking. Paying $60k a year in taxes at my full-time job is also ridiculous. I’ve always heard that Warren Buffet pays less in taxes than his secretary....there is a way, just need to figure it out.

Just playing devils advocate here....I can’t see why anyone would get into cattle other than tax reasons. It truly appears there is no money in it, other than the few folks saying they do it for tax purposes.

I guess the other option is to buy a laundromat and write stuff off like the Mexican cartel does :lol: Although, that method seems much easier than what I’m going for here.
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Re: Being honest

Post by WestTNguy » Mon Nov 11, 2019 4:49 pm

Nesikep wrote:
Sun Nov 10, 2019 11:41 am
WestTNguy wrote:
Sat Nov 09, 2019 10:09 am
If I can have a tractor I can depreciate each year, that holds its value...I can sell it later and recover some cash. I hope. I’m not an expert at this, but I feel like this is the best method for me.
Around here, if you sell something for more than its depreciated value, that's taxable income.. We don't have some of our equipment listed in our taxes because we bought it cheap enough we'll never sell it for less, it is probably appreciating in value
I just looked this up, and unless it’s changed recently, that only applies to equipment that was sold within 5 years (7 for certain things) from the date of purchase.

I’m not sure if that applies to equipment that you could sell for more than the purchase price though (after that 5 year period).
Last edited by WestTNguy on Mon Nov 11, 2019 5:24 pm, edited 1 time in total.
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Re: Being honest

Post by WestTNguy » Mon Nov 11, 2019 4:55 pm

This is an excellent presentation by a CPA who specializes in farm tax:

The truth is like poetry. Most folks hate poetry.

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Re: Being honest

Post by WestTNguy » Tue Nov 12, 2019 11:29 am






These cover everything discussed in this post. Excellent presentations.
The truth is like poetry. Most folks hate poetry.

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Re: Being honest

Post by Ryder » Wed Nov 13, 2019 1:48 am

The first red flag I saw was that you planned to buy a dozer.
For no more land than you have , I question the wisdom of this.
Sometimes plans look real good in our minds or on paper, but when it comes to actually doing it
things may not turn out as well as you thought.
This is where experience comes in.
Ryder

Deo Vindice

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